Most Read

There are 3 constituent changes for the STAR50 INDEX and 6 changes for the STAR100 Index at the March rebalance that will be implemented at the close on 14 March.
The last-minute methodology change could lead to under/over positioning on some names and those stocks could move the most over the next few days.
Performance has been mixed in the changes to the STAR50 INDEX but the outright adds have continued to outperform the outright deletes for the STAR100 Index.

Aeon (8267) And Aeon Mall (8905) To Be a Guess The Ratio Trade

On 28-Feb-25, the last day of their fiscal year, Aeon Co Ltd (8267 JP) signed a deal to acquire Aeon Delight via Tender Offer and Aeon Mall via scrip exchange.
For Aeon Mall, that means negotiation on the share exchange ratio over the next 5-6 weeks.
While I have an opinion on the fair ratio (explained below), I find “Guess The Ratio” trades fraught with bad governance outcomes. The 3-month average is often used.

STAR Chip Index Rebalance: Shenzhen Bluetrum (688332) Replaces JoulWatt (688141)

CSI announced the changes for the March rebalance after market close on 28 February and the changes will be effective after the close of trading on 14 March.
As expected, Shenzhen Bluetrum Technology (688332 CH) will be added to the index while JoulWatt Technology Co (688141 CH) will be deleted.
Shenzhen Bluetrum Technology (688332 CH) outperformed JoulWatt Technology Co (688141 CH) in the last quarter of 2024 and there has been a reversal of fortunes this calendar year.

A/H Premium Tracker (To 28 Feb 2025): AH Premia Continue to Fall; Expect Widening

AH Premia continue to fall. Spread curve torsion reverses again with narrow premia trades seeing Hs perform the best.
Warning signs are starting to flash on spreads. This week I have the biggest week of changes recommended that I have ever had. By a long ways.
This week threatens to be a very strange week geopolitically. Being smaller in crowded trades is probably a good thing.

JX Advanced Metals IPO Preview

By Douglas Kim

JX Advanced Metals (5016 JP) is seeking to raise about ¥460 billion in the upcoming IPO on the Tokyo Stock Exchange. The indicative IPO price is ¥862 per share.
The final IPO pricing will be on 10 March. JX Advanced Metals will be listed on 19 March. Eneos is selling as many as 534.9 million shares in the IPO.
The company has a strong customer base. It is a key supplier to TSMC, Samsung, Intel, SK Hynix, and Micron for sputtering targets and high-purity metals.

Aeon Tender Offer for Aeon Delight (9787) At ¥5,400/Share

Bowing before bureaucratic, governmental, societal, and perhaps finally shareholder pressure, Aeon Co Ltd (8267 JP) Friday announced it is rolling up two big subsidiaries.
Aeon Mall will be merged with Aeon in a share exchange and Aeon Delight (9787 JP) will be taken over via slightly long-dated Tender Offer which starts Monday.
This is probably the wrong price, but it isn’t egregiously wrong I expect. And it would be difficult to block. I expect it gets done easily.

HK Connect SOUTHBOUND Flows (To 28 Feb 2025); Big Volumes, HUGE Net Buys on Blue Chips, Tech-Y Names

Gross SOUTHBOUND volumes cleared HK$800bn for the second week in a row. NET buying by SOUTHBOUND was HK$75bn which was perhaps a new record.
Notable again is the HUGE back-and-forth. If HK$865bn traded and SOUTHBOUND “only” bought HK$75bn, HK$395bn was round-tripped for short-term purposes.
Last week I flipped to short Alibaba Group Holding (9988 HK). Sentiment may worsen and there’s lots to sell later this week. Staying short Alibaba for now.

Sparx Launches Another Offensively Underpriced Takeover at a Fat Premium – SNT (6319) +94%

Sparx on Friday announced a Tender Offer at 0.55x book and an EV of less than inventory (<20% of revenue) for Snt Corp (6319 JP) – another metal monozukuri company.
Last year they did it on IJTT Co., Ltd. (7315 JP). That one got bumped. This one could too, but cross-holders own nearly 60%.
This kind of company has skill-sets which may be portable but the product line is tied to old Japan. The takeover

Box Trades Explained: How Traders Execute Near Risk-Free Arbitrage in Hong Kong’s Options Market

By Gaudenz Schneider

Box trades are gaining popularity on the Hong Kong Stock Exchange. These arbitrage strategies exploit price discrepancies in options markets for near risk-free profits.
Long box trades involve simultaneously buying bull call spreads and bear put spreads with identical strikes and expiration dates, creating a fixed payoff regardless of the underlying asset’s price movement.
Box trades require careful execution consideration of spreads, commissions, margins, and fees, with risks primarily in execution and operations rather than market exposure.

Weekly Deals Digest (02 Mar) – Japan Post Bank, 7&I, Aeon Delight, Tonami, Mixue, JXAM

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: Mixue Group (2097 HK) andJX Advanced Metals (5016 JP) IPOs. Japan Post Bank (7182 JP) placement.
Event-Driven developments: Seven & I Holdings (3382 JP), Aeon Delight (9787 JP), Tonami Holdings (9070 JP), Sg Fleet (SGF AU).

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Mar 02

Most Read: Seven & I Holdings, Japan Post Bank, Cambricon Technologies Lt, Mesoblast Ltd, China Mobile, Seoul Guarantee Insurance, Aeon Delight, EcoPro Materials, AEON Mall and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed
China A50 ETFs Rebalance Preview: China Rally Takes Cambricon Up, Up & Away
ASX200 Index AdHoc Rebalance Preview: Mesoblast (MSB) Could Replace Arcadium Lithium (LTM) Next Week
China Mobile (941 HK) Pullback Offers a Tactical Re-Entry Opportunity
HEW: Tariffs Trumped Data
Seoul Guarantee Insurance IPO Bookbuilding Results Analysis
Aeon Tender Offer for Aeon Delight (9787) At ¥5,400/Share
Ecopro Materials: Seeking 300 Billion Won in Additional Capital Raise
Aeon (8267) And Aeon Mall (8905) To Be a Guess The Ratio Trade

7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More

The MBO is off. Itochu Corp (8001 JP) has apparently not been able to agree with Ito-san on board composition/representation and management control. That the MBO is off isn’t surprising.
7&i says they “continue to engage constructively with ACT and alternate proposals but news articles suggest that almost 6mos after proposing an NDA, ACT still haven’t had access to financials.
The shares are off hard today to a level below where ACT’s first bid was considered “not even worth discussing”. There will be questions at the AGM and before.

Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed

Media reports indicate that Japan Post Holdings (6178 JP) could sell JPY 600bn (US$4.02bn) of Japan Post Bank (7182 JP) with the announcement coming as early as this week.
The selldown is driven by Japan Post Holdings (6178 JP) needing to reduce its holding in Japan Post Bank (7182 JP) to 50% or lower by March 2026.
Passive index trackers will buy around 11.4% of the offering at the time of settlement of the placement shares with the balance being bought in January 2026.

China A50 ETFs Rebalance Preview: China Rally Takes Cambricon Up, Up & Away

With the review cutoff done, there could be three changes for the iShares A50 China (2823 HK)/ CSOP China A50 (HKD) (2822 HK) ETFs in March.
Cambricon Technologies, Guotai Junan Securities and China United Network could replace Inner Mongolia Yili Industrial Group, CGN Power and Luzhou Laojiao in the ETFs.
Guotai Junan Securities (2611 HK) is expected to be added to the iShares China Large-Cap (FXI) (FXI US) in March, so there should be inflows for the A-shares and H-shares.

ASX200 Index AdHoc Rebalance Preview: Mesoblast (MSB) Could Replace Arcadium Lithium (LTM) Next Week

There could be ad hoc change for the S&P/ASX 200 (AS51 INDEX) prior to the announcement of the changes at the March rebalance.
Arcadium Lithium (LTM AU) could stop trading next week following the acquisition by Rio Tinto Ltd (RIO AU). The Royal Court of Jersey could sanction the scheme on 5 March.
Mesoblast (MSB AU) is a high probability inclusion to the index, followed by DigiCo Infrastructure REIT (DGT AU). The stock that misses out will be added at the regular rebalance.

China Mobile (941 HK) Pullback Offers a Tactical Re-Entry Opportunity

By Nico Rosti

In our last insight covering China Mobile (941 HK) we said the stock was overbought. It made a sharp pullback last week that may turn into a good BUY opportunity.
Support levels to buy range from 79.1 to 76.4, assuming this pullback is a buy-the-dip scenario, something we will discuss in this insight.
If the stock resumes its rally, the next WEEKLY profit targets will be between 82.64 and 84.4.

HEW: Tariffs Trumped Data

By Phil Rush

Resilience in Euro area price and wage inflation, ESI surveys, and hawkish comments in the latest meeting accounts were trumped by US events. Renewed tariff threats and soft US surveys led a dovish repricing for the Fed that also dominated for the ECB.
Next week has more top tier releases, starting with flash EA inflation for February where we are still a tenth above consensus at 2.4%. That won’t stop the ECB cutting, but should encourage restraint for April. US payrolls and tariffs are the other highlights.
Note: Smartkarma is now the sole distributor of our research, so clients will only receive all other research from Smartkarma (queries to transition@smartkarma.com).

Seoul Guarantee Insurance IPO Bookbuilding Results Analysis

By Douglas Kim

The majority of the investors placed orders at 26,000 won, which is the lower end of the IPO price range (26,000 won to 31,800 won).
SGIC held internal discussions to set the public offering price at 26,000 won. The final price (which is likely to be 26,000 won) will be revealed on 4 March.
Our updated base case valuation of SGIC is base case target price of 28,925 won per share. Given the lack of upside, we have a negative view of this deal.

Aeon Tender Offer for Aeon Delight (9787) At ¥5,400/Share

Bowing before bureaucratic, governmental, societal, and perhaps finally shareholder pressure, Aeon Co Ltd (8267 JP) Friday announced it is rolling up two big subsidiaries.
Aeon Mall will be merged with Aeon in a share exchange and Aeon Delight (9787 JP) will be taken over via slightly long-dated Tender Offer which starts Monday.
This is probably the wrong price, but it isn’t egregiously wrong I expect. And it would be difficult to block. I expect it gets done easily.

Ecopro Materials: Seeking 300 Billion Won in Additional Capital Raise

By Douglas Kim

It has been reported in the local media that EcoPro Materials (450080 KS) is seeking about 300 billion won in additional capital which represents about 5% of its market cap.
There could be concerns about dilution associated with this capital raise which could result in share price decline. The company is currently considering on issuing RCPS for this capital raise.
There could be additional concerns about potential dilution associated with this capital raise which could result in further share price decline for Ecopro Materials.

Aeon (8267) And Aeon Mall (8905) To Be a Guess The Ratio Trade

On 28-Feb-25, the last day of their fiscal year, Aeon Co Ltd (8267 JP) signed a deal to acquire Aeon Delight via Tender Offer and Aeon Mall via scrip exchange.
For Aeon Mall, that means negotiation on the share exchange ratio over the next 5-6 weeks.
While I have an opinion on the fair ratio (explained below), I find “Guess The Ratio” trades fraught with bad governance outcomes. The 3-month average is often used.

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Mar 01

Most Read: Seven & I Holdings, Sun Art Retail, Japan Post Bank, LG Chem Ltd, Mobvista, JX Advanced Metals, Tencent, Korea Stock Exchange KOSPI 200, TSE Tokyo Price Index TOPIX and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed
Japan Post Bank (7182) – Missed Opportunity Leaves Likely Shadow Overhang
Korea FSS Shakes Up Rights Offerings – Special Review Rule Now Live
HK CEO & Director Dealings (28th Feb 2025): Mobvista, Xtep, Onewo, Bonny International
JX Advanced Metals (5016 JP): IPO Fast-Entry 30% Away; Index Review Inclusion in Aug & Sep 2025
Tencent (700 HK): Expiry-Day Recap; Intra-Day Swing of 4.1%.
Street Intel on NPS’s Buy Flow—the Key Swing Factor as Korea’s Short-Selling Comeback
Shareholder Benefits to Return Amid Rise in Foreign Ownership and Dissolution of Cross-Shareholdings

7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More

The MBO is off. Itochu Corp (8001 JP) has apparently not been able to agree with Ito-san on board composition/representation and management control. That the MBO is off isn’t surprising.
7&i says they “continue to engage constructively with ACT and alternate proposals but news articles suggest that almost 6mos after proposing an NDA, ACT still haven’t had access to financials.
The shares are off hard today to a level below where ACT’s first bid was considered “not even worth discussing”. There will be questions at the AGM and before.

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

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

Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed

Media reports indicate that Japan Post Holdings (6178 JP) could sell JPY 600bn (US$4.02bn) of Japan Post Bank (7182 JP) with the announcement coming as early as this week.
The selldown is driven by Japan Post Holdings (6178 JP) needing to reduce its holding in Japan Post Bank (7182 JP) to 50% or lower by March 2026.
Passive index trackers will buy around 11.4% of the offering at the time of settlement of the placement shares with the balance being bought in January 2026.

Japan Post Bank (7182) – Missed Opportunity Leaves Likely Shadow Overhang

The Offering comes in lighter than expected. The buyback is smaller than expected. The resultant overhang is larger than expected.
The index flows around the delivery date are well-understood. They are what they are.
Shareholder structure is such that this is not quite a new IPO but needs a lot of new shareholders. BUT… there is one redeeming feature one should not ignore.

Korea FSS Shakes Up Rights Offerings – Special Review Rule Now Live

With this new rule, the FSS is flagging shaky rights offerings early, signaling a likely correction request—and often, the first step toward the deal getting axed.
Spot the red flags early and use the window before the FSS drops the hammer to position for a reversal play.
The FSS’s early notice makes a reversal likely as traders bet on the deal getting nuked after the initial disclosure drop.

HK CEO & Director Dealings (28th Feb 2025): Mobvista, Xtep, Onewo, Bonny International

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
The key stocks mentioned in this regular series include: Mobvista (1860 HK), Xtep International (1368 HK), Onewo (2602 HK), and Bonny International Holding (1906 HK).

JX Advanced Metals (5016 JP): IPO Fast-Entry 30% Away; Index Review Inclusion in Aug & Sep 2025

By Dimitris Ioannidis

JX Advanced Metals (5016 JP) is scheduled to be listed on 19 March 2025, at the prime market of the Tokyo Stock Exchange at an expected valuation of ~$5.3bn.
Fast-Entry inclusion for the one global index can take place on 25 March if the stock price surges by ~30% or more on the first trading day.
Review inclusion given failed fast-entries for both global indices, is expected in August and September 2025.

Tencent (700 HK): Expiry-Day Recap; Intra-Day Swing of 4.1%.

By Gaudenz Schneider

During yesterday’s Option expiration day, Tencent (700 HK) experienced an intra-day swing of 4.1%.
Trading in the afternoon oscillated around the prominent 500 strike level. Around 66% of calls and 2% of puts expired in the money.
Volume was lower than in the preceding days; a total of 38 million shares were traded, with the morning session accounting for 53% of the volume.

Street Intel on NPS’s Buy Flow—the Key Swing Factor as Korea’s Short-Selling Comeback

NPS’s aggressive net buying over the past four months? Just a 3% buffer rebalance—not some structural bullish call on K-stocks.
Street intel points to NPS capping buys in the low-14% range, 1%p below target, only defending against dips. With short selling back on from March 31, further buying looks unlikely.
With NPS stepping back and retail still weak, no real size remains on the buy side. Short flow could hit harder than expected—time to price it in and adjust positioning.

Shareholder Benefits to Return Amid Rise in Foreign Ownership and Dissolution of Cross-Shareholdings

By Aki Matsumoto

Most shareholder benefits items can be used in Japan. There’s history of more companies abolishing shareholder benefits programs because they believed that shareholder returns should conducted rather than shareholder benefits.
Amid rising foreign ownership and the dissolution of cross-shareholdings, more companies have begun to reverse the trend toward companies approaching individual shareholders with shareholder benefits programs.
The fact that stock prices of companies offering shareholder benefits tended to fall lower during stock market plunges may be due to the fact that they were mostly defensive stocks.

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Feb 28

Most Read: Seven & I Holdings, Jio Financial Services, Tonami Holdings, Japan Post Bank, WeDoctor Holdings, Mesoblast Ltd, Wuhan Dameng Database and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
The Beat Ideas: What Is Inside Jio Financial Services?
JPH Launches “MBO” (LBO with SARs for Family/Execs) For Trucker Tonami Holdings (9070). Too Cheap.
Japan Post Bank (7182) – Missed Opportunity Leaves Likely Shadow Overhang
Japan Post Bank (7182 JP): A US$4.2 Billion Secondary Offering
We Doctor Holdings IPO Preview: Explosive Growth and Narrowing Losses, The Right Time for an IPO
ASX200 Index AdHoc Rebalance Preview: Mesoblast (MSB) Could Replace Arcadium Lithium (LTM) Next Week
EA Resilience Is Perfunctory Problem
STAR 100: Quick Update to Expectations for Last-Minute Methodology Changes; Announcement Soon.
Japan Post Bank US$4bn Placement – Smaller Deal, Similar Structure, Might Yield Similar Results

7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More

The MBO is off. Itochu Corp (8001 JP) has apparently not been able to agree with Ito-san on board composition/representation and management control. That the MBO is off isn’t surprising.
7&i says they “continue to engage constructively with ACT and alternate proposals but news articles suggest that almost 6mos after proposing an NDA, ACT still haven’t had access to financials.
The shares are off hard today to a level below where ACT’s first bid was considered “not even worth discussing”. There will be questions at the AGM and before.

The Beat Ideas: What Is Inside Jio Financial Services?

By Sudarshan Bhandari

Jio Financial Services (JIOFIN IN) has launched a robust digital ecosystem with its flagship JioFinance app, enhancing its tech-driven financial service offerings.
The digital-first strategy minimizes legacy constraints, enabling personalized financial solutions that significantly boost efficiency and competitive advantage.
This evolution redefines traditional banking, positioning JFSL as a versatile, technology-led powerhouse for sustainable growth in India’s financial sector.

JPH Launches “MBO” (LBO with SARs for Family/Execs) For Trucker Tonami Holdings (9070). Too Cheap.

Yesterday, Japan Post Holdings (6178 JP) announced an MBO for Tonami Holdings (9070 JP) whereby the family/execs will stay on. JPH will own 99.97%, the execs/family 0.03%.
This deal is yet another in a line of logistics deals dating back the last 2+ years where the premium has been quite big. This time is +74%.
But this is not overly expensive. Makes me go hmmmm…

Japan Post Bank (7182) – Missed Opportunity Leaves Likely Shadow Overhang

The Offering comes in lighter than expected. The buyback is smaller than expected. The resultant overhang is larger than expected.
The index flows around the delivery date are well-understood. They are what they are.
Shareholder structure is such that this is not quite a new IPO but needs a lot of new shareholders. BUT… there is one redeeming feature one should not ignore.

Japan Post Bank (7182 JP): A US$4.2 Billion Secondary Offering

Japan Post Bank (7182 JP) has announced a secondary offering of up to 416.1 million shares (including overallotment), worth around US$4.2 billion.
The offering includes a ToSTNeT-3 and an on-market buyback. Including the overallotment, Japan Post Holdings (6178 JP) will reduce its stake from 61.50% to 50.00% of voting rights.
Understanding the potential offer price requires looking at JPH’s past sales and recent large Japanese placements. The pricing date is likely 10 March.

We Doctor Holdings IPO Preview: Explosive Growth and Narrowing Losses, The Right Time for an IPO

By Andrei Zakharov

We Doctor Holdings, a top-tier provider of AI-enabled medical services and digital platform which connects hospitals, doctors, and pharmacies, plans to go public in Hong Kong.
We Doctor Holdings has raised ~$1.5B to date from investors, including Tencent, 5Y Capital, Goldman Sachs, Hillhouse Capital, AIA, and Qiming Venture Partners, among others.
The Hangzhou-based healthtech company has delivered explosive revenue growth of 107% y/y for the six months ended Jun-24.

ASX200 Index AdHoc Rebalance Preview: Mesoblast (MSB) Could Replace Arcadium Lithium (LTM) Next Week

There could be ad hoc change for the S&P/ASX 200 (AS51 INDEX) prior to the announcement of the changes at the March rebalance.
Arcadium Lithium (LTM AU) could stop trading next week following the acquisition by Rio Tinto Ltd (RIO AU). The Royal Court of Jersey could sanction the scheme on 5 March.
Mesoblast (MSB AU) is a high probability inclusion to the index, followed by DigiCo Infrastructure REIT (DGT AU). The stock that misses out will be added at the regular rebalance.

EA Resilience Is Perfunctory Problem

By Phil Rush

Crashing US surveys in 2025 have looked idiosyncratic, as spurious exaggeration of exceptionalism ends. The ESI corroborates the PMI’s resilience in the euro area.
Price expectations have been trending further above long-run averages without a one-off shock, suggesting European policy is too loose for this stage of the economic cycle.
EA unemployment remains lower than a year ago, inconsistent with tight monetary conditions. We still see the ECB’s last cut in June, much sooner than the market prices.

STAR 100: Quick Update to Expectations for Last-Minute Methodology Changes; Announcement Soon.

By Janaghan Jeyakumar, CFA

STAR 100 index tracks the next 100 names (51st-150th ranks) and it represents the mid-cap segment of the STAR market.
The methodology for constituent selection for this index was revised yesterday. These revisions will influence the ADDs/DELs for the March 2025 review which is to be announced soon.
In this insight, we have presented our updated expectations for the new methodology.

Japan Post Bank US$4bn Placement – Smaller Deal, Similar Structure, Might Yield Similar Results

By Sumeet Singh

Japan Post Holdings (6178 JP) (JPH) aims to sell around US$4bn worth of Japan Post Bank (7182 JP) (JPB), trimming its stake to below 50%.
JPH had last sold around US$9bn worth of JPB shares in Mar 2023. That deal had a similar structure and it didn’t end up performing well.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.

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Feb 27

Most Read: Seven & I Holdings, Korea Stock Exchange KOSPI 200, Japan Post Bank, ZTO Express Cayman , China International Capital Corporation, Tonami Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – Bain Gets York Holdings with a Surprising Price, And We Approach Deal Deadlines
Seven & I Holdings (3382 JP): A Potential Derailing of the MBO
Korea: Short Selling Is Back in March; Trade Ideas
Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed
Japan Post Bank (7182) – Report of ¥600bn Offer Would Lead to Index Flows, and a New Future
ZTO Express (2057 HK): Not Delivering Despite Double Index Inclusion
CICC (3908 HK) & China Galaxy (6881 HK): The Next Mega Brokerage Merger
Japan Post Bank (7182 JP): Japan Post Holding (6178 JP)’s Rumoured Offering
Tonami Holdings (9070 JP): Japan Post Holdings’ (6178 JP) JPY10,200 Tender Offer
Korean IPOs: Cornerstone Bill Back in Play—This Time, It Might Stick

7&I (3382) – Bain Gets York Holdings with a Surprising Price, And We Approach Deal Deadlines

Over the weekend, the Nikkei and Jiji reported the 7&i Board met Saturday and decided Bain would have preferred negotiating rights to buy York Holdings. They bid “over ¥700bn.”
That’s a trifle lower than the ¥1.2trn Reuters reported (on Christmas Day) Bain bid but details aren’t known. Proper structuring would get the vast majority to 7&i in post-tax cash.
For 7&i to decide by the AGM (which could be contentious), they need time to debate. Bids are likely needed in 3wks. In the meantime, “Trump Risk” lurks.

Seven & I Holdings (3382 JP): A Potential Derailing of the MBO

Bloomberg reports that the MBO is stalling due to disagreements within the consortium over who will control Seven & I Holdings (3382 JP) after it is privatised.
The Nikkei reported that Itochu Corp (8001 JP) was set to withdraw from the MBO consortium. Along with CP ALL PCL (CPALL TB)’s non-participation, the MBO’s financing is in trouble.
An Alimentation Couche-Tard (ATD CN) bid remains in play but has issues. While progressing, the Board’s restructuring plan fails to prove a credible alternative.

Korea: Short Selling Is Back in March; Trade Ideas

Since short selling was banned in November 2023, short interest has plunged in Korea as shorts were covered. Markets have not done much over the last 16 months though.
Foreign investor holdings have dropped from 32.05% in July to 28.57%. The top 25 stocks bought by foreign investors outperformed the top 25 stocks sold by 128% in 16 months.
There will be trade opportunities across indices, pref/ords, index migrations and deletions, potential market upgrades and overvalued stocks being sold.

Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed

Media reports indicate that Japan Post Holdings (6178 JP) could sell JPY 600bn (US$4.02bn) of Japan Post Bank (7182 JP) with the announcement coming as early as this week.
The selldown is driven by Japan Post Holdings (6178 JP) needing to reduce its holding in Japan Post Bank (7182 JP) to 50% or lower by March 2026.
Passive index trackers will buy around 11.4% of the offering at the time of settlement of the placement shares with the balance being bought in January 2026.

Japan Post Bank (7182) – Report of ¥600bn Offer Would Lead to Index Flows, and a New Future

On 22-February-2023 a Reuters suggested JPH (6178) had “started talks” to sell a big stake in JP Bank (7182). Five days later they announced a complicated deal discussed here.
Today, an article suggests Japan Post Holdings (6178 JP) will sell ¥600bn in Japan Post Bank (7182 JP) to get ownership below 50% (as with JPI). A buyback might appear.
JPB has issued a “there’s smoke” release. Like last time. Expected unwind of known overhang means minimal surprise here. The question is whether they could surprise (big buyback? capital plan?).

ZTO Express (2057 HK): Not Delivering Despite Double Index Inclusion

ZTO Express Cayman (2057 HK) will be added to the Hang Seng China Enterprises Index (HSCEI INDEX) next week and to a global index couple of weeks after that.
Despite passives needing to buy more than 5% of float inside a month, the stock has barely budged in a rallying China market.
The increase in cumulative excess volume has been very gradual, indicative of low positioning in the stock. With a lot to buy over the next few weeks, that could change.

CICC (3908 HK) & China Galaxy (6881 HK): The Next Mega Brokerage Merger

Reportedly, China International Capital Corporation (3908 HK) and China Galaxy Securities (6881 HK), two of China’s leading state-backed brokerages, intend to merge via a share swap, forming China’s third-largest broker.
This report/rumour arrives shortly after the successful merger of Guotai Junan Securities (2611 HK) (GJS) and Haitong Securities (6837 HK).
As with GJS/Haitong, expect a Merger by Absorption structure, and that Galaxy (or CICC?) issue new A and H shares to the target. I’d be picking up CICC shares here.

Japan Post Bank (7182 JP): Japan Post Holding (6178 JP)’s Rumoured Offering

Reuters reports that Japan Post Holdings (6178 JP) (JPH) is planning to sell shares in Japan Post Bank (7182 JP) (JPB), which could total some JPY600 billion (US$4.0 billion).
The potential offering would align with JPH’s stated goal of reducing its equity interest in JPB to 50% or less by FY 2025.
The potential offering is relatively smaller than JPB’s 2023 offering. Compared to its peers, JPB’s valuation remains undemanding.

Tonami Holdings (9070 JP): Japan Post Holdings’ (6178 JP) JPY10,200 Tender Offer

Tonami Holdings (9070 JP) has recommended a Japan Post Holdings (6178 JP)-sponsored MBO at JPY10,200, a 73.8% premium to the last close.
The offer is attractive compared to historical trading ranges and peer multiples. The offer represents an all-time high.
The offer is above the midpoint of the special committee IFA’s DCF valuation range but below that of the target IFA. However, the required minority acceptance rate is not onerous.

Korean IPOs: Cornerstone Bill Back in Play—This Time, It Might Stick

The odds of the cornerstone system getting the green light are significantly higher than they were two years ago.
With bills typically taking a year to kick in, we need to stay on this—if all goes smoothly, cornerstone investors could hit Korean IPOs as early as next year.
In the early stages, cornerstone allocations will be key to shaping our IPO trading playbook. Staying ahead of these shifts is crucial.

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Feb 26

Most Read: Xiamen Amoytop Biotech Co Ltd, Korea Stock Exchange KOSPI 200, Trip.com, Makino Milling Machine Co, Mixue Group, Cambricon Technologies Lt, ZTE Corp H, Pentamaster International, JX Advanced Metals and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Quiddity Leaderboard STAR 50/100 Mar 25: LONGs Up ~12% Vs SHORTs in a Month; More to Come
Korea: Short Selling Is Back in March; Trade Ideas
Trip.com (TCOM, 9961HK): 4Q24, Even Better Results, But Plunged as Expected
Nidec Says It Won’t Raise Price on Makino (6135)
MIXUE Group (2097 HK) IPO: Small Float to Keep Stock Out of Most Indices
China A50 ETFs Rebalance Preview: China Rally Takes Cambricon Up, Up & Away
FXI Rebalance Preview: Two Sets of Changes as ZTE Breaks Out, China Coal Dumps
Pentamaster (1665 HK) Breaks Ahead Of Vote. Yet Pricing IS Fair
JX Advance Metals Pre-IPO – Peer Comparison or Lack Thereof
JX Advanced Metals (5016 JP) IPO: Valuation Insights

Quiddity Leaderboard STAR 50/100 Mar 25: LONGs Up ~12% Vs SHORTs in a Month; More to Come

By Janaghan Jeyakumar, CFA

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.
STAR 100 index tracks the next 100 names (51st-150th ranks) and it represents the mid-cap segment of the STAR market.
In this insight, we take a look at the potential ADDs/DELs for the STAR 50 and STAR 100 indices for the March 2025 index rebal event.

Korea: Short Selling Is Back in March; Trade Ideas

Since short selling was banned in November 2023, short interest has plunged in Korea as shorts were covered. Markets have not done much over the last 16 months though.
Foreign investor holdings have dropped from 32.05% in July to 28.57%. The top 25 stocks bought by foreign investors outperformed the top 25 stocks sold by 128% in 16 months.
There will be trade opportunities across indices, pref/ords, index migrations and deletions, potential market upgrades and overvalued stocks being sold.

Trip.com (TCOM, 9961HK): 4Q24, Even Better Results, But Plunged as Expected

By Ming Lu

Total revenue grew by 24% in 4Q24, higher than 19% we expected.
The stock price plunged in Hong Kong as we expect in our preview note.
However, we believe, any stock decline over 11% means overreacted.

Nidec Says It Won’t Raise Price on Makino (6135)

Nidec Corp (6594 JP) released a multi-page document regarding its bid for Makino Milling Machine Co (6135 JP) yesterday.
It talked a bit about the back-and-forth with Makino, and gave Nidec’s side of the story. Makino has been making their side public too. A meeting is due early March.
In the document, there was a line suggesting Nidec won’t raise price even against a counteroffer. They didn’t need to say that. The question is what Makino will do.

MIXUE Group (2097 HK) IPO: Small Float to Keep Stock Out of Most Indices

Mixue Group (MIX HK) has priced its IPO at HK$202.5/share and will raise up to HK$3.97bn (US$511m) if the oversubscription option is exercised, valuing the company at HK$76.35bn (US$9.8bn).
Despite a US$10bn market cap, the stock will find it difficult to be added to global and local indices since 60% of the shares are unlisted.
The stock is likely to remain in the shadows for one global index and could be added to the other in December. HSCI inclusion could take place in September.

China A50 ETFs Rebalance Preview: China Rally Takes Cambricon Up, Up & Away

With the review cutoff done, there could be three changes for the iShares A50 China (2823 HK)/ CSOP China A50 (HKD) (2822 HK) ETFs in March.
Cambricon Technologies, Guotai Junan Securities and China United Network could replace Inner Mongolia Yili Industrial Group, CGN Power and Luzhou Laojiao in the ETFs.
Guotai Junan Securities (2611 HK) is expected to be added to the iShares China Large-Cap (FXI) (FXI US) in March, so there should be inflows for the A-shares and H-shares.

FXI Rebalance Preview: Two Sets of Changes as ZTE Breaks Out, China Coal Dumps

With the review cutoff done, there could be two changes for the iShares China Large-Cap (FXI) (FXI US) in March.
Guotai Junan Securities (2611 HK) and ZTE Corp H (763 HK) are expected to replace China Tourism Group Duty Free (1880 HK) and China Coal Energy Co H (1898 HK).
ZTE Corp H (763 HK) has broken out to new highs (possibly on short covering) while China Coal Energy Co H (1898 HK) continues to sell off.

Pentamaster (1665 HK) Breaks Ahead Of Vote. Yet Pricing IS Fair

Back on the 19th December 2024, Pentamaster Corp (PENT MK) announced an Offer, by way of a Scheme, to take out its pseudo dual-listed twin, Pentamaster International (1665 HK).
The Offer Price was HK$1.00/share – including a HK$0.07/share dividend – a 45.3% premium to last close, but arguably more like a 61% premium to undisturbed.
The Court Meeting is the 28th February. Shares are down 15%+ in recent days. On no news. Not a great look.

JX Advance Metals Pre-IPO – Peer Comparison or Lack Thereof

By Sumeet Singh

JX Advanced Metals (5016 JP)’s parent, ENEOS Holdings (5020 JP), is looking to raise around US$2.6bn via selling more than half of its stake in JXAM in its Japan IPO.
JXAM engages in business activities primarily focused on the development, manufacture and sale of materials made from copper and rare metals, which are used in the semiconductor and ICT fields.
We looked at the company’s past performance in our previous notes. In this note, we undertake a peer comparison.

JX Advanced Metals (5016 JP) IPO: Valuation Insights

JX Advanced Metals (5016 JP) is a global leader in the semiconductor and ICT materials sector. It is seeking to raise up to US$2.6 billion.
We previously discussed the IPO in JX Advanced Metals (5016 JP) IPO: The Bull Case and JX Advanced Metals (5016 JP) IPO: The Bear Case.
In this note, we discuss valuation. My analysis suggests that JXAM is attractively valued at the IPO price compared to peer multiples.

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Feb 25

Most Read: Sumitomo Corp, Seven & I Holdings, ZhongAn Online P&C Insurance C, BeiGene , Britannia Industries, Studio Alice, Korea Stock Exchange Kospi Index, Western Digital and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Warren Buffett and the Japanese Trading Houses I
7&I (3382) – Bain Gets York Holdings with a Surprising Price, And We Approach Deal Deadlines
Seven & I Restructures but Discontent Rises Among Franchisees and Customers
HSTECH Index Rebalance: Horizon Robotics, Tencent Music Replace East Buy, ZA Online; US$2.3bn Trade
HSCEI Index Rebalance: Beigene, ZTO Replace Sino Biopharma, Li Ning; Surprise for Some
NIFTY50/NEXT50 Index Rebalance: Zomato, JioFin Slide In as BPCL, Britannia Drop Out; US$3.3bn Trade
A Very Odd Change – Studio Alice (2305) Self-Demotes
FSC Gives the Green Light for Full-Scale Short Selling Today: What It Means for Trading
Sandisk Spin-off Overview
Quiddity NIFTY Mar25 Rebal: Some Surprises; Combined Flows of US$1bn One-Way

Warren Buffett and the Japanese Trading Houses I

The Berkshire Hathaway Annual Shareholder Letter for 2024 was released this weekend. Much was made in Japanese twitter-space of the comments he made on the Japanese trading houses.
He said Berkshire Hathaway’s admiration of these companies “has consistently grown” and Berkshire likes their capital deployment, managements, and their attitude in respect to investors. They also pay themselves reasonably.
He mentioned Berkshire will increase their stakes somewhat in the trading houses “over time.” That comment deserves some exploration, as does the comment about yen funding.

7&I (3382) – Bain Gets York Holdings with a Surprising Price, And We Approach Deal Deadlines

Over the weekend, the Nikkei and Jiji reported the 7&i Board met Saturday and decided Bain would have preferred negotiating rights to buy York Holdings. They bid “over ¥700bn.”
That’s a trifle lower than the ¥1.2trn Reuters reported (on Christmas Day) Bain bid but details aren’t known. Proper structuring would get the vast majority to 7&i in post-tax cash.
For 7&i to decide by the AGM (which could be contentious), they need time to debate. Bids are likely needed in 3wks. In the meantime, “Trump Risk” lurks.

Seven & I Restructures but Discontent Rises Among Franchisees and Customers

By Michael Causton

York HD is due to take over operation of all group business except Seven Eleven at the end of February and press reports suggest Bain’s bid has been accepted.
All of which is fine but this leaves Seven Eleven Japan which is struggling against rivals. Even franchise owners are becoming more critical.
A recent survey by Nikkei also suggested that consumers are increasingly favouring Lawson and Familymart and 30% visited Seven Eleven stores less frequently in 2024. This is a big problem.

HSTECH Index Rebalance: Horizon Robotics, Tencent Music Replace East Buy, ZA Online; US$2.3bn Trade

As expected, Horizon Robotics (9660 HK) replaces East Buy Holding (1797 HK) in the Hang Seng TECH Index (HSTECH INDEX) in March.
In a surprise, Tencent Music Entertainment Group (1698 HK) will be added and ZhongAn Online P&C Insurance C (6060 HK) will be deleted.
Horizon Robotics (9660 HK) is also an inclusion to the HSIII Index and HSCI Index and will be added to Southbound Stock Connect in May.

HSCEI Index Rebalance: Beigene, ZTO Replace Sino Biopharma, Li Ning; Surprise for Some

BeiGene (6160 HK) and ZTO Express Cayman (2057 HK) will replace Sino Biopharmaceutical (1177 HK) and Li Ning (2331 HK) in the HSCEI INDEX at the close on 7 March.
Estimated one-way turnover at the rebalance is 5% resulting in a round-trip trade of HK$6.4bn (US$825m). The final capping will use the close of trading on 4 March.
ZTO Express Cayman (2057 HK) is also an inclusion to a global index with implementation scheduled for the close on 21 March.

NIFTY50/NEXT50 Index Rebalance: Zomato, JioFin Slide In as BPCL, Britannia Drop Out; US$3.3bn Trade

Zomato (ZOMATO IN) and Jio Financial Services (JIOFIN IN)‘s stock prices have taken a beating this year, but they still make it into the NIFTY Index (NIFTY INDEX) in March.
Bharat Petroleum (BPCL IN) and Britannia Industries (BRIT IN) will be out of the NIFTY Index (NIFTY INDEX) but will be added to the NSE Nifty Next50 Index (NIFTYJR INDEX).
Hyundai Motor India (HYUNDAI IN) will be added to a global index on 28 February and will then be added to the NSE Nifty Next50 Index (NIFTYJR INDEX) in March.

A Very Odd Change – Studio Alice (2305) Self-Demotes

Last Thursday, in an announcement which was very odd, photo studio Studio Alice (2305 JP) announced that it was voluntarily leaving TSE Prime.
They said they would “demote” themselves to TSE Standard as of 27 February in order to save money by not responding to the requirements of Prime.
That means a voluntary TOPIX deletion at end-March. The stock has an interesting shareholder structure and this event is 115 days of ADV to sell.

FSC Gives the Green Light for Full-Scale Short Selling Today: What It Means for Trading

The push for MSCI DM inclusion drove Korea’s full short-selling resumption, clearing the KRX index rights issue, allowing MSCI to roll out derivatives, making full short selling the final step.
With full short-selling back, traders are watching for large-scale quant funds to return, potentially boosting liquidity across the market alongside the ATS launch, after years of individual large-cap setups.
The market is watching how full short-selling resumption narrows bid-ask spreads and impacts sector rotation, prompting traders to prepare setups for the broader market shift.

Sandisk Spin-off Overview

By Richard Howe

On February 24, 2025, Western Digital (WDC) will spin-off 80.1% of its stake in Sandisk (SNDK).
Sandisk is trading in the when issued market at $48.26. At that share price, SNDK is trading at an EV/ annualized revenue of 1.0x and a price to annualized earnings of 9.9x.
This price looks relatively attractive given Sandisk’s NAND flash memory partner, Xioxia, is trading at 1.3x TTM revenue.

Quiddity NIFTY Mar25 Rebal: Some Surprises; Combined Flows of US$1bn One-Way

By Janaghan Jeyakumar, CFA

The March 2025 Rebalance results for the NIFTY broad market Indices were announced after the close on Friday 21st February 2025.
There will be two changes for NIFTY 50 and five changes for NIFTY 100 during the March 2025 index rebal event.
All NIFTY 50 and NIFTY 100 changes will also be reflected in the NIFTY Next 50 index which could see US$366mn one-way capping flows.

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Feb 24

Most Read: Seven & I Holdings, Hang Seng Index, Sumitomo Corp, Horizon Robotics, BeiGene , ZhongAn Online P&C Insurance C, Mayne Pharma and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – Bain Gets York Holdings with a Surprising Price, And We Approach Deal Deadlines
Hang Seng Internet & IT Index Rebalance: Five Changes with First De-SPAC Listing In
Hang Seng Index (HSI) Rebalance: Does Anyone Know What the Index Committee Is Thinking?
Warren Buffett and the Japanese Trading Houses I
HSCI Index Rebalance: 29 Adds, 41 Deletes & Changes to Southbound Stock Connect
HSCEI Index Rebalance: Beigene, ZTO Replace Sino Biopharma, Li Ning; Surprise for Some
HSTECH Index Rebalance: Horizon Robotics, Tencent Music Replace East Buy, ZA Online; US$2.3bn Trade
Mayne Pharma (MYX AU): Cosette Pharma’s Binding Offer at A$7.40
Merger Arb Mondays (24 Feb) – Seven & I, Proto, Tam Jai, Pentamaster, Vesync, Canvest, Domain
Seven & I Restructures but Discontent Rises Among Franchisees and Customers

7&I (3382) – Bain Gets York Holdings with a Surprising Price, And We Approach Deal Deadlines

Over the weekend, the Nikkei and Jiji reported the 7&i Board met Saturday and decided Bain would have preferred negotiating rights to buy York Holdings. They bid “over ¥700bn.”
That’s a trifle lower than the ¥1.2trn Reuters reported (on Christmas Day) Bain bid but details aren’t known. Proper structuring would get the vast majority to 7&i in post-tax cash.
For 7&i to decide by the AGM (which could be contentious), they need time to debate. Bids are likely needed in 3wks. In the meantime, “Trump Risk” lurks.

Hang Seng Internet & IT Index Rebalance: Five Changes with First De-SPAC Listing In

There will be 5 changes for the Hang Seng Internet & Information Technology Index (HSIII Index) at the March rebalance. There is one surprise for us with Synagistics being added.
Estimated one-way turnover at the rebalance is 6.5% resulting in a round-trip trade of HK$3.74bn (US$482m). 4 stocks will have over 1x ADV to trade.
Horizon Robotics (9660 HK) is an add to the HSIII, Hang Seng TECH Index and HSCI. Inclusion in Southbound Stock Connect will take place in May.

Hang Seng Index (HSI) Rebalance: Does Anyone Know What the Index Committee Is Thinking?

We continue to be led down the garden path – no constituent changes for the Hang Seng Index (HSI INDEX) in March means we remain at 83 members.
Despite having an opportunity to add stocks to the index without increasing turnover, the index committee have done nothing. Which begs the question – what exactly are they waiting for?
Float and capping changes result in an estimated one-way turnover of 3.8% and the resulting round-trip trade is HK$16.7bn (US$2.15bn).

Warren Buffett and the Japanese Trading Houses I

The Berkshire Hathaway Annual Shareholder Letter for 2024 was released this weekend. Much was made in Japanese twitter-space of the comments he made on the Japanese trading houses.
He said Berkshire Hathaway’s admiration of these companies “has consistently grown” and Berkshire likes their capital deployment, managements, and their attitude in respect to investors. They also pay themselves reasonably.
He mentioned Berkshire will increase their stakes somewhat in the trading houses “over time.” That comment deserves some exploration, as does the comment about yen funding.

HSCI Index Rebalance: 29 Adds, 41 Deletes & Changes to Southbound Stock Connect

There are 29 adds and 41 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents down to 505.
We expect 27 of the 29 HSCI inclusions to be added to Stock Connect from the open on 10 March while Horizon Robotics (9660 HK) should be added in May.
We expect 28 of the 41 HSCI deletions will be removed from Stock Connect and there has been increased Southbound holding in a lot of the stock this calendar year.

HSCEI Index Rebalance: Beigene, ZTO Replace Sino Biopharma, Li Ning; Surprise for Some

BeiGene (6160 HK) and ZTO Express Cayman (2057 HK) will replace Sino Biopharmaceutical (1177 HK) and Li Ning (2331 HK) in the HSCEI INDEX at the close on 7 March.
Estimated one-way turnover at the rebalance is 5% resulting in a round-trip trade of HK$6.4bn (US$825m). The final capping will use the close of trading on 4 March.
ZTO Express Cayman (2057 HK) is also an inclusion to a global index with implementation scheduled for the close on 21 March.

HSTECH Index Rebalance: Horizon Robotics, Tencent Music Replace East Buy, ZA Online; US$2.3bn Trade

As expected, Horizon Robotics (9660 HK) replaces East Buy Holding (1797 HK) in the Hang Seng TECH Index (HSTECH INDEX) in March.
In a surprise, Tencent Music Entertainment Group (1698 HK) will be added and ZhongAn Online P&C Insurance C (6060 HK) will be deleted.
Horizon Robotics (9660 HK) is also an inclusion to the HSIII Index and HSCI Index and will be added to Southbound Stock Connect in May.

Mayne Pharma (MYX AU): Cosette Pharma’s Binding Offer at A$7.40

Mayne Pharma (MYX AU) entered a scheme implementation deed with Cosette Pharma at A$7.40 per share, a 36.8% premium to the undisturbed price.
The offer is conditional on shareholder and FIRB approval. The vote is low-risk as the two largest shareholders are supportive.
The offer is reasonable but not a knockout bid. At the last close and for an end-of-May payment, the gross/annualised spread was 2.8%/11.0%.

Merger Arb Mondays (24 Feb) – Seven & I, Proto, Tam Jai, Pentamaster, Vesync, Canvest, Domain

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: Seven & I Holdings (3382 JP), Smart Share Global (EM US), Tam Jai International (2217 HK), Vesync (2148 HK), ESR Group (1821 HK), Goldlion Holdings (533 HK).
Lowest spreads: Makino Milling Machine Co (6135 JP), Shibaura Electronics (6957 JP), Millennium & Copthorne Hotels Nz (MCK NZ), Domain Holdings Australia (DHG AU), Avjennings Ltd (AVJ AU).

Seven & I Restructures but Discontent Rises Among Franchisees and Customers

By Michael Causton

York HD is due to take over operation of all group business except Seven Eleven at the end of February and press reports suggest Bain’s bid has been accepted.
All of which is fine but this leaves Seven Eleven Japan which is struggling against rivals. Even franchise owners are becoming more critical.
A recent survey by Nikkei also suggested that consumers are increasingly favouring Lawson and Familymart and 30% visited Seven Eleven stores less frequently in 2024. This is a big problem.

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Feb 23

Most Read: Shift Inc, Xiaomi Corp, Britannia Industries, Mesoblast Ltd, Alibaba Group Holding , L&T Technology Services Limited, Horizon Robotics, Mayne Pharma and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance: Performance of Potential Adds/Deletes & Positioning
Alibaba (9988 HK): Results This Week; Over US$1bn Passive Selling in 3 Weeks
Hang Seng Indexes: Announcement Today; Updated Flows (Some Big Ones)
India: March Rebalance Announcement Tomorrow; Round-Trip Trade Over US$2.5bn
S&P/ASX Index Rebalance Preview: Changes Stable as Adds Outperform Deletes Bigly
Alibaba – How to Position Post Earnings Amid Sticky Volatility
Nifty IT Index Rebalance: Oracle Financial Services Takes a Beating but Replaces L&T Tech
Hang Seng Internet & IT Index Rebalance: Five Changes with First De-SPAC Listing In
Mayne Pharma (MYX AU): Cosette Pharma’s Binding Offer at A$7.40
#107 India Insight: PhonePe Plans IPO, Adani Sees Growth, Gujarat Budget Boosts Economy

Nikkei 225 Index Rebalance: Performance of Potential Adds/Deletes & Positioning

The changes to the Nikkei 225 (NKY INDEX) as part of the March rebalance should be announced in just over 2 weeks. We expect 2-3 changes at the review.
The forecast adds have massively outperformed the forecast deletes and the Nikkei225 Index over every time period going back 3 months with the largest outperformance in the last month.
Positioning appears to be stretched in one forecast add while there appears to be under positioning in a couple of the forecast deletes.

Alibaba (9988 HK): Results This Week; Over US$1bn Passive Selling in 3 Weeks

Alibaba Group Holding (9988 HK) stock has rallied bigly over the last month and has gained 55% over that period.
That has led to Alibaba‘s weight in the HSI INDEX, HSCEI INDEX, HSTECH INDEX and HSIII Index rising above the cap of 8%/12% and passives will sell on 7 March.
We estimate passive trackers will need to sell US$1.2bn of stock due to capping. Shorts have been increasing, and quarterly results will be announced on 20 February.

Hang Seng Indexes: Announcement Today; Updated Flows (Some Big Ones)

Hang Seng Indexes announces changes to the Hang Seng Index, Hang Seng China Enterprises Index, Hang Seng TECH Index, HSIII Index and HSCI Index (among others) post market close today.
The net round-trip trade across the stocks is estimated to be HK$35bn (US$4.5bn) with big impact in a lot of stocks.
Capping will lead to most inflows to Meituan (3690 HK) while the largest outflows will be from Alibaba Group Holding (9988 HK) and Xiaomi Corp (1810 HK).

India: March Rebalance Announcement Tomorrow; Round-Trip Trade Over US$2.5bn

The Index Maintenance Sub-Committee of NSE Indices will meet on 21 February to conduct a semi-annual and quarterly review of stocks in various Nifty equity indices.
The changes will be announced after market close tomorrow and will be implemented at the close of trading on 28 March.
Based on the forecast index changes and capping changes for a few indices, the round-trip trade will be over US$2.5bn and many stocks will have over 0.5x ADV to trade.

S&P/ASX Index Rebalance Preview: Changes Stable as Adds Outperform Deletes Bigly

Nearing a few days left in the review period, there could be 39 adds/deletes across the S&P/ASX family of indices in March.
Passive trackers will need to trade a lot of stock in the forecast changes, with the impact being especially large for the changes to the S&P/ASX 200 and S&P/ASX 300.
Except for the S&P/ASX 200 (AS51 INDEX) that is heavily tracked, the performance of the forecast changes to the other indices has been very stable with adds outperforming deletes bigly.

Alibaba – How to Position Post Earnings Amid Sticky Volatility

By John Ley

Alibaba had a super charged move this week, risking 14.56% on its earnings release.
We look at how price movement and volatility evolve in the month after earnings releases.
Recommendations are made on how to position through options in this environment of enhanced volatility.

Nifty IT Index Rebalance: Oracle Financial Services Takes a Beating but Replaces L&T Tech

In line with our forecast, Oracle Financial Services (OFSS IN) replaces L&T Technology Services Limited (LTTS IN) in the Nifty IT Index (NSEIT INDEX) at the March rebalance.
L&T Technology Services (LTTS IN) is also being excluded from the F&O segment at the close on 27 March. Open interest is ~900k shares and there will be unwinding.
Passive trackers will need to trade between 0.5-0.6x ADV in the stocks. Impact increases to 1-2 days of delivery volume.

Hang Seng Internet & IT Index Rebalance: Five Changes with First De-SPAC Listing In

There will be 5 changes for the Hang Seng Internet & Information Technology Index (HSIII Index) at the March rebalance. There is one surprise for us with Synagistics being added.
Estimated one-way turnover at the rebalance is 6.5% resulting in a round-trip trade of HK$3.74bn (US$482m). 4 stocks will have over 1x ADV to trade.
Horizon Robotics (9660 HK) is an add to the HSIII, Hang Seng TECH Index and HSCI. Inclusion in Southbound Stock Connect will take place in May.

Mayne Pharma (MYX AU): Cosette Pharma’s Binding Offer at A$7.40

Mayne Pharma (MYX AU) entered a scheme implementation deed with Cosette Pharma at A$7.40 per share, a 36.8% premium to the undisturbed price.
The offer is conditional on shareholder and FIRB approval. The vote is low-risk as the two largest shareholders are supportive.
The offer is reasonable but not a knockout bid. At the last close and for an end-of-May payment, the gross/annualised spread was 2.8%/11.0%.

#107 India Insight: PhonePe Plans IPO, Adani Sees Growth, Gujarat Budget Boosts Economy

By Sudarshan Bhandari

PhonePe, India’s largest digital payments player, begins IPO preparations after redomiciling to India in December 2022. With impressive growth and profitability.
Adani Group reassures investors and creditors with strong cash reserves and double-digit EBITDA growth.
Gujarat’s Rs 3.70 trillion budget for 2025-26 includes no new taxes. Focus is on infrastructure, green growth, human development, and economic activities, with new projects.

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Feb 22

Most Read: Shin Kong Financial Holding, Goodman Group, Xiaomi Corp, Britannia Industries, China National Building Material, Domain Holdings Australia , Mixue Group, Mayne Pharma, REA Group Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Shin Kong (2888 TT) / Taishin (2887 TT) – Waiting on the FSC
Goodman Group (GMG AU): Much Bigger Index Impact of US$2.5bn Equity Offering
Hang Seng Indexes: Announcement Today; Updated Flows (Some Big Ones)
India: March Rebalance Announcement Tomorrow; Round-Trip Trade Over US$2.5bn
CNBM (3323 HK): Whitewash Waiver Secured. Next Is The Proration
Domain Holdings (DHG AU): CoStar Makes an NBIO; Buys 16.9% Stake; Short Covering Today
Domain (DHG AU): CoStar’s A$4.20/Share NBIO
MIXUE IPO – Decent Cornerstone, past Sentiment Overhang
Mayne Pharma (MYX AU): Cosette’s A$7.40/Share Scheme
StubWorld: REA Group Dives As CoStar Muscles Into Turf

Shin Kong (2888 TT) / Taishin (2887 TT) – Waiting on the FSC

The TFTC approved in early January, The TFTC said market power would be limited and competition unrestricted. Another CNA article suggested the two FHCs were completing employee placement plans.
Apparently, as of a month ago, only the Shin Kong Bank employee settlement plan had not been completed but the FSC has rules about that. Consideration likely proceeds.
There are specific rules about how these things are dealt with. In the meantime, the spread – still wide – is narrowing.

Goodman Group (GMG AU): Much Bigger Index Impact of US$2.5bn Equity Offering

Goodman Group went into a trading halt and then announced results and an underwritten equity placement of A$4bn (US$2.54bn) to pursue growth opportunities across logistics and data center operations.
The stock has dropped since CIC’s stake sale in December but still continues to handily outperform peers.
There will be some passive buying in the stock at the time of share settlement and more a few days later to mop up around 37% of the offering.

Hang Seng Indexes: Announcement Today; Updated Flows (Some Big Ones)

Hang Seng Indexes announces changes to the Hang Seng Index, Hang Seng China Enterprises Index, Hang Seng TECH Index, HSIII Index and HSCI Index (among others) post market close today.
The net round-trip trade across the stocks is estimated to be HK$35bn (US$4.5bn) with big impact in a lot of stocks.
Capping will lead to most inflows to Meituan (3690 HK) while the largest outflows will be from Alibaba Group Holding (9988 HK) and Xiaomi Corp (1810 HK).

India: March Rebalance Announcement Tomorrow; Round-Trip Trade Over US$2.5bn

The Index Maintenance Sub-Committee of NSE Indices will meet on 21 February to conduct a semi-annual and quarterly review of stocks in various Nifty equity indices.
The changes will be announced after market close tomorrow and will be implemented at the close of trading on 28 March.
Based on the forecast index changes and capping changes for a few indices, the round-trip trade will be over US$2.5bn and many stocks will have over 0.5x ADV to trade.

CNBM (3323 HK): Whitewash Waiver Secured. Next Is The Proration

On the 6th December 2024, China National Building Material (3323 HK) (CNBM), China’s leading building materials company, offered to buy back 841,749,304 H-shares at HK$4.03/share, a 15.1% premium to undisturbed.
This elevated CNBM’s parent’s stake to 50.01% of total shares from 45.02% currently, necessitating a whitewash waiver so the parent would not be obliged to make a full blown offer.
Independent H-shareholder overwhelmingly approved the waiver yesterday, the 19th February. Tendering closes on the 5th March. Minimum pro-ration is 19.24%. I’m estimating at least 35%. The Offer is now unconditional.

Domain Holdings (DHG AU): CoStar Makes an NBIO; Buys 16.9% Stake; Short Covering Today

Costar Group (CSGP US) bought a 16.9% stake in Domain Holdings Australia (DHG AU) yesterday at A$4.2/share in cash. That is a 34.6% premium to the last close.
Then, Costar Group (CSGP US) made a non-binding indicative proposal to buy all the Domain Holdings Australia (DHG AU) shares it did not own at A$4.2/share.
Nine Entertainment Co Holdings (NEC AU) owns just over 60% of Domain Holdings Australia (DHG AU) and should move higher on the offer.

Domain (DHG AU): CoStar’s A$4.20/Share NBIO

Domain Holdings Australia (DHG AU), Australia’s number two player in the online real estate market, has announced a non-binding proposal, by way of a Scheme, from CoStar Group (CSGP US).
CoStar is offering A$4.20/share, in cash. A A$0.02/share dividend declared on the 13th Feb will be added (but now ex). CoStar also acquired 16.9% of shares out, also at A$4.20/share.
Domain is 60% owned by Nine Entertainment Co Holdings (NEC AU), and has been known to be scoping out a buyer. A firm offer will require FIRB to sign off.

MIXUE IPO – Decent Cornerstone, past Sentiment Overhang

By Sumeet Singh

Mixue Group is now looking to raise around US$450m in its upcoming Hong Kong IPO.
MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
We have covered various aspects of the deal in our previous notes. In this note, we will talk about the IPO pricing.

Mayne Pharma (MYX AU): Cosette’s A$7.40/Share Scheme

Mayne Pharma (MYX AU), a leader in dermatology and women’s health, has entered into a Scheme Implementation Deed with US-based pharmaceutical outfit, Cosette Pharmaceuticals.
Cosette is offering A$7.40/share, a 37% premium to last close. Apart from Mayne’s shareholder approval, the Offer requires FIRB signing off.
The Offer also has the backing of Mayne’s two largest shareholder, Viburnum and Bruce Mathieson, collectively holding 14.1%. Implementation is expected late May, early June 2025. This is done.

StubWorld: REA Group Dives As CoStar Muscles Into Turf