Most Read

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

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

A double dose of StubWorld this week: REA Group Ltd (REA AU)‘s rolls over as CoStar Group (CSGP US) bets big on key rival Domain Holdings Australia (DHG AU).
Preceding my comments on REA and News Corp (NWSA US) 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%.

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Feb 21

Most Read: Goodman Group, Britannia Industries, Sigma Healthcare, Canvest Environmental Protection Group, Xiaomi Corp, Proto Corp, China National Building Material, Sotetsu Holdings, Tsumura & Co and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Goodman Group (GMG AU): Much Bigger Index Impact of US$2.5bn Equity Offering
India: March Rebalance Announcement Tomorrow; Round-Trip Trade Over US$2.5bn
MV Australia Equal Weight Index Rebalance Preview: Potential Changes in March; Multiple Overlaps
Canvest (1381 HK): SAFE In The Bag, But Oddly, Still Not Free From Pre-Cons
Hang Seng Indexes: Announcement Today; Updated Flows (Some Big Ones)
Proto Corp (4298) – Large Active Holders Going Activish-Y
CNBM (3323 HK): Whitewash Waiver Secured. Next Is The Proration
Proto Corp (4298 JP): Kaname Capital Throws a Spanner in the Works
Sotetsu Holdings (9003) – Crossholders Sell Down – Big ADV Multiple, Low Earnings Multiple, Boring
Tsumura (4540 JP) Equity Offering – Easy To Swallow, and Not Expensive

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.

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.

MV Australia Equal Weight Index Rebalance Preview: Potential Changes in March; Multiple Overlaps

With 6 days left to review cutoff, there are 2 potential adds and 3 potential deletions for the MV Australia Equal Weight Index at the March rebalance.
Even if there are no constituent changes, capping changes will lead to one-way turnover of 3% and a round-trip trade of A$159m.
The final list of inclusions/exclusions will depend on price movements till next Friday and whether the provider makes any significant changes to the free float of stocks in the universe.

Canvest (1381 HK): SAFE In The Bag, But Oddly, Still Not Free From Pre-Cons

After Canvest Environmental Protection Group (1381 HK) announced on the 23rd Jan it had secured Mofcom approval, after securing NDRC earlier that month, that left SAFE. Or so I thought.
SAFE has now been secured, yet two pre-cons concerning certain (internal) guarantees remain outstanding. It’s rare to see SAFE sign off with other pre-cons still hanging.
The consolation here is that KM Lai (ED, DC) and Loretta Lee (ED, CL) are on the hook for a chunk of change if they cause the proposal to lapse.

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).

Proto Corp (4298) – Large Active Holders Going Activish-Y

When the deal was announced, I wrote that the MBO for Proto Corp (4298 JP) was opportunistic and was possibly “vulnerable” to activist attentions (original insight here).
On the 17th, one large active holder Ancient Arts LP filed an amendment to their Large Shareholder Filing showing a change in Reason for Investment.
On the 18th of Feb, top independent shareholder Kaname Capital reported an increase in stake and sent Open Letters which appear only now to be circulating. It’s worth a look.

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.

Proto Corp (4298 JP): Kaname Capital Throws a Spanner in the Works

Kaname Capital, the second-largest shareholder of Proto Corp (4298 JP), has issued an open letter stating that the JPY2,100 MBO tender offer is a bad conclusion at the wrong price.
Some assertions are valid, while others do not stand up to scrutiny. Kaname claims that Proto is worth JPY3,778, which will make it hard to reach a compromise.
Maintaining terms is increasingly not viable. The Chairman is likely to respond by lowering the minimum acceptance condition and/or bumping to secure the support of minorities (excluding Kaname).

Sotetsu Holdings (9003) – Crossholders Sell Down – Big ADV Multiple, Low Earnings Multiple, Boring

Sotetsu Holdings (9003 JP) today announced a large-ish secondary equity offering – 10% of shares out and 20% of Max Real World Float.
This is crossholders selling down roughly 30% of what they own. Sotetsu announced a buyback for a quarter of the offering over the next six months.
The shareholder structure and distribution within Max Real World Float tells you all you need to know.

Tsumura (4540 JP) Equity Offering – Easy To Swallow, and Not Expensive

Tsumura & Co (4540 JP) shocked everyone a year ago when they announced an immediate large price hike across the board for its kampo medicines. The stock was +35% immediately.
It did not fall back. Now the stock is up 60% from a year ago and earnings are too. It’s still <10x PER. Now we get a ¥10bn secondary offering.
It’s 12 days of ADV but not super heavy, and there is a buyback on the back end.

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Feb 20

Most Read: Kingsoft Corp, China National Building Material, Goodman Group, Mesoblast Ltd, Alibaba Group Holding , POSCO Holdings, Sigma Healthcare, Canvest Environmental Protection Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Goodman Group (GMG AU): Much Bigger Index Impact of US$2.5bn Equity Offering
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March
China National Building Material (3323 HK): H Share Buyback Vote on 19 February
Goodman Group (GMG AU) – Big Placement, Big Index Flow But…
S&P/ASX Index Rebalance Preview: Changes Stable as Adds Outperform Deletes Bigly
Alibaba (9988 HK): How Options Traders Are Navigating the Rally and Volatility. Top Trades.
Goodman Group Placement – Large Deal, Doesn’t Seem Well Flagged, Not Particularly Exciting
Post-Ban Short Play Idea: TIGER Top 10 ETF Rebal in June
MV Australia Equal Weight Index Rebalance Preview: Potential Changes in March; Multiple Overlaps
Canvest (1381 HK): Regulatory Precondition Satisfied

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 Index (HSI) Rebalance Preview: Inclusion Candidates for March

Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 7 March.
With no constituent changes, one-way turnover will be 2.75% with 3 stocks being capped downward. This gives the index committee the opportunity to add more stocks without significantly increasing turnover.
The return of the high and medium probability inclusions has matched the performance of the Hang Seng Index over the last few months, Shorts have climbed in some names.

China National Building Material (3323 HK): H Share Buyback Vote on 19 February

The IFA opines that the China National Building Material (3323 HK) share buyback, which will acquire a maximum of 841.7 million H Shares at HK$4.03, is fair and reasonable.
The share buyback seems designed to enable the CNBM parent company to bypass the creeper rule and squeeze the shorts.
The fortuitous material derating of peers has helped make the buyback attractive. Therefore, the votes should pass, and the minimum acceptance condition should be met.

Goodman Group (GMG AU) – Big Placement, Big Index Flow But…

After a minor “disaster” in a secondary placement in December, this morning industrial/infrastructure (including data centres) REIT/etc Goodman Group (GMG AU) announced results and an A$4bn primary offering.
The large offering comes at a 6.9% discount, and For a combination of reasons, there is a LOT of buying to do with index tracking over the next short while.
But that too has complications. Some is immediate. Some a little delayed. A bunch may be supplied by short sellers. There is one easy trade. A few more complicated.

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 (9988 HK): How Options Traders Are Navigating the Rally and Volatility. Top Trades.

By Gaudenz Schneider

This Insight analyses Alibaba Group Holding (9988 HK) tailor-made option strategies traded over the last five trading days on the Hong Kong Exchange. Strategy highlights and volatility context are provided.
These traders tailor structures to risk budgets and take calculated bets. Several large box trades appeared on the ticker.
Expect more movement on Alibaba Group Holding (9988 HK)‘s Q3 earnings announcement tomorrow, 20 February 2025. Option-implied move at the end of this Insight.

Goodman Group Placement – Large Deal, Doesn’t Seem Well Flagged, Not Particularly Exciting

Goodman Group (GMG AU) is looking to raise around US$2.5bn to partly fund its data centre expansion plans.
Goodman’s shares have performed exceptionally well over the past year, driven by its pivot towards data centers.
In this note, we will talk about the placement and run the deal through our ECM framework.

Post-Ban Short Play Idea: TIGER Top 10 ETF Rebal in June

POSCO Holdings and Samsung SDI stand out for shorting, as both were hit hard by the EV battery chasm. With June rebal looming, they’re likely getting the boot.
Samsung Biologics and Hanwha Aerospace could replace them, with a large float cap gap and strong price momentum, making it unlikely for the gap to flip by May.
As June rebalancing nears, volume could drop, increasing passive impact. With shorting back, passive flow intensity may rise, leading to significant price action.

MV Australia Equal Weight Index Rebalance Preview: Potential Changes in March; Multiple Overlaps

With 6 days left to review cutoff, there are 2 potential adds and 3 potential deletions for the MV Australia Equal Weight Index at the March rebalance.
Even if there are no constituent changes, capping changes will lead to one-way turnover of 3% and a round-trip trade of A$159m.
The final list of inclusions/exclusions will depend on price movements till next Friday and whether the provider makes any significant changes to the free float of stocks in the universe.

Canvest (1381 HK): Regulatory Precondition Satisfied

The regulatory precondition concerning Canvest Environmental Protection Group (1381 HK)’s privatisation offer from Grandblue Environment Co A (600323 CH) has been satisfied.
The sole remaining precondition concerns resolving loan guarantee issues. Canvest is taking steps to resolve these issues, and satisfying this precondition is low-risk.
Despite peers’ re-rating, the offer remains attractive, and the vote is low-risk. At the last close, the gross/annualised spread was 4.5%/15.0% for a mid-June payment.

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Feb 19

Most Read: Kingsoft Corp, Tam Jai International, Macromill, Inc, Goodman Group, JX Advanced Metals, Mesoblast Ltd, PEC Ltd., XtalPi Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March
Tam Jai (2217 HK): Toridoll (3397 JP)’s Excellent Offer
Tam Jai (2217 HK): Toridoll (3397 JP)’s Scheme Privatisation at HK$1.58
CVC Extends Macromill (3978) Bid and Invites Two Funds To Reinvest – More Interesting Than You Think
Goodman Group (GMG AU): Much Bigger Index Impact of US$2.5bn Equity Offering
JX Advance Metals Pre-IPO – The Positives – Transforming
JX Advanced Metals (5016 JP) IPO: The Bull Case
S&P/ASX Index Rebalance Preview: Changes Stable as Adds Outperform Deletes Bigly
PEC Ltd. (PEC SP): Privatisation Offer From Liberty Group
Xtapli Placement – Questionable Timing. An AI Momentum Play, at Best

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

Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 7 March.
With no constituent changes, one-way turnover will be 2.75% with 3 stocks being capped downward. This gives the index committee the opportunity to add more stocks without significantly increasing turnover.
The return of the high and medium probability inclusions has matched the performance of the Hang Seng Index over the last few months, Shorts have climbed in some names.

Tam Jai (2217 HK): Toridoll (3397 JP)’s Excellent Offer

After Tam Jai (2217 HK) was suspended, in Tam Jai (2217 HK) Suspended: Expect Toridoll (3397 JP) To Make An Offer I expected an Offer from TORIDOLL Holdings (3397 JP).
I also thought an Offer price ~HK$1.50/share would be welcome, but wasn’t hopeful. We got both – a Scheme from Toridoll at HK$1.58/share (best & final).
Clean deal. Just a question of timing. Docs may be delayed to incorporate FY25E (Mar Y/E) financials.

Tam Jai (2217 HK): Toridoll (3397 JP)’s Scheme Privatisation at HK$1.58

Tam Jai International (2217 HK) announced a scheme privatisation offer from TORIDOLL Holdings Corporation (3397 JP) at HK$1.58 per share, a 75.6% premium to the last close price.
The key condition is the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). No disinterested shareholder holds a blocking stake.
The offer price is final. While 53% below the IPO price, the offer is attractive compared to peer multiples and historical trading ranges. This is a done deal.

CVC Extends Macromill (3978) Bid and Invites Two Funds To Reinvest – More Interesting Than You Think

Today, the closing date of the Tender Offer for Macromill, Inc (3978 JP) by CVC saw the tender offer extended by an extra 10 days with new news.
Price had been declared final. One very large shareholder had said they would not tender. Two more were negotiating. Those two will now tender and reinvest in the back end.
This does not mean the tender offer is a done deal, but it is worth examining.

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.

JX Advance Metals Pre-IPO – The Positives – Transforming

JX Advance Metal’s (JXAM) 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.
In this note, we talk about the positive aspects of the deal.

JX Advanced Metals (5016 JP) IPO: The Bull Case

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.
JXAM is a wholly owned subsidiary of ENEOS Holdings (5020 JP). After the listing, it is expected to become an equity-method affiliate of ENEOS.
The bull case rests on its leading market position, focus businesses’ improving performance, improving profitability, shift to cash generation, and low leverage.

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.

PEC Ltd. (PEC SP): Privatisation Offer From Liberty Group

PEC Ltd. (PEC SP), a plant and terminal engineering specialist, has (finally) announced an Offer from Allied Energy Services, an engineering entity under the Liberty Group.
Liberty is offering S$0.84/share (not final) – including a AS$0.20/share special dividend – a 12.8% premium to undisturbed; but really more like a >35% premium.
Irrevocables from the board of 63.38% have been secured. Looks pretty clean. Assuming late May payment, pay up to S$0.79/share for a 6%/15% gross/annualised spread.

Xtapli Placement – Questionable Timing. An AI Momentum Play, at Best

Xtapli is looking to raise around US$242m via a primary placement, after having raised US$145m in Jan 2025.
QuantumPharm is a R&D platform, utilizing quantum physics-based first-principles calculation, advanced AI, high-performance cloud computing, and scalable and standardized robotic automation to provide drug and material science R&D solutions.
In this note, we will talk about the placement and run the deal through our ECM framework.

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Feb 18

Most Read: Alibaba Group Holding , Shift Inc, Kokusai Electric , Shinko Electric Industries, SRE Holdings Corp, Kingsoft Corp, Macromill, Inc, Base Food, Soundwill Holdings, Tam Jai International and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Alibaba (9988 HK): Results This Week; Over US$1bn Passive Selling in 3 Weeks
Nikkei 225 Index Rebalance: Performance of Potential Adds/Deletes & Positioning
[Quiddity Index Feb25] Nikkei 225 Mar Rebal: 2 or 3 IN, 2 or 3 OUT, ~$3bn 1-Way, 1 Squeeze.
JIC Launches Shinko (6967) Deal At ¥5,920/Share
Sony To Sell Down SRE Holdings (2980 JP) Block – AI-Related Growth Stock Should See Support
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March
CVC Extends Macromill (3978) Bid and Invites Two Funds To Reinvest – More Interesting Than You Think
Base Food (2936 JP): Partial Tender Offer at JPY688
Soundwill Holdings (878 HK): Privatisation Expected From The Controlling Family
Tam Jai (2217 HK): Toridoll (3397 JP)’s Scheme Privatisation at HK$1.58

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.

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.

[Quiddity Index Feb25] Nikkei 225 Mar Rebal: 2 or 3 IN, 2 or 3 OUT, ~$3bn 1-Way, 1 Squeeze.

The data observation period is done. No rank changes in the top candidates since mid-Jan. Capping for Fast Retailing (9983 JP) is confirmed.
For me, it is 2 or 3 ADDs, depending. Kokusai Electric (6525 JP) is still tops. BayCurrent Consulting (6532 JP) second. Shift Inc (3697 JP) third.
Kokusai is +26.7% in 5 weeks since I wrote bullishly, despite news/confirmation of getting the boot from a global index at end-Feb. Baycurrent is +39.7% (link). Now we count flows.

JIC Launches Shinko (6967) Deal At ¥5,920/Share

Today quite late, the JIC Consortium announced the launch of the Shinko Electric Industries (6967 JP) Tender Offer expected “mid-February”. Price is still ¥5,920/share.
This is basically going to be all arbs and passive now. And arbs gonna arb.
Congrats if you bought the lows in late November early December. Great trade. Congrats if you bought the last delay dip. Now we can all go home.

Sony To Sell Down SRE Holdings (2980 JP) Block – AI-Related Growth Stock Should See Support

SRE Holdings Corp (2980 JP) does a business in AI Cloud&Consulting for the real estate, finance, and Life & Healthcare business. Sony Corp (6758 JP) is selling a stake.
The offering is for about US$50mm assuming a 10% discount today’s close. It is not clear how much this was expected but there is a decent-sized short position.
The stock has its ups and downs, and recently decided it liked Q3 earnings and guidance. That bodes well for the offering.

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

Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 7 March.
With no constituent changes, one-way turnover will be 2.75% with 3 stocks being capped downward. This gives the index committee the opportunity to add more stocks without significantly increasing turnover.
The return of the high and medium probability inclusions has matched the performance of the Hang Seng Index over the last few months, Shorts have climbed in some names.

CVC Extends Macromill (3978) Bid and Invites Two Funds To Reinvest – More Interesting Than You Think

Today, the closing date of the Tender Offer for Macromill, Inc (3978 JP) by CVC saw the tender offer extended by an extra 10 days with new news.
Price had been declared final. One very large shareholder had said they would not tender. Two more were negotiating. Those two will now tender and reinvest in the back end.
This does not mean the tender offer is a done deal, but it is worth examining.

Base Food (2936 JP): Partial Tender Offer at JPY688

Base Food (2936 JP) announced a partial tender offer from MBF Acceleration, the largest shareholder.
The offer is for a maximum of 3.7 million shares (6.97% ownership ratio) at JPY688 per share, a 23.3% premium to the last close price.
The offer has no minimum acceptance condition, and the price is reasonable. The estimated minimum proration is 21.43%.

Soundwill Holdings (878 HK): Privatisation Expected From The Controlling Family

Small-Cap property developer Soundwill Holdings (878 HK) is currently suspended pursuant to the Takeovers Code
Soundwill is controlled as to 74.97% by Grace Foo (ED), and her descendants, Wai Ling Chan (deputy chairman), and Hing Tat Chan (chairman).
Soundwill is trading at a staggering 0.08x P/B, with the majority of its book value tied up in investment properties.

Tam Jai (2217 HK): Toridoll (3397 JP)’s Scheme Privatisation at HK$1.58

Tam Jai International (2217 HK) announced a scheme privatisation offer from TORIDOLL Holdings Corporation (3397 JP) at HK$1.58 per share, a 75.6% premium to the last close price.
The key condition is the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). No disinterested shareholder holds a blocking stake.
The offer price is final. While 53% below the IPO price, the offer is attractive compared to peer multiples and historical trading ranges. This is a done deal.

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Feb 17

Most Read: JX Advanced Metals, Shift Inc, Zenhoren , Alibaba Group Holding , Japan Eyewear Holdings , Samsung Electronics Pref Shares, Trend Micro Inc, Samsung Electronics, Kokusai Electric and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

JX Advanced Metals (5016 JP) IPO: TPX Add in April; Global Idx: One in August; One in March or Sep
Nikkei 225 Index Rebalance: Performance of Potential Adds/Deletes & Positioning
MUFG Partial Offer by MUFG to Buy ~50% of Small Cap Zenhoren (5845) – Watch the Back End
Alibaba (9988 HK): Results This Week; Over US$1bn Passive Selling in 3 Weeks
Japan Eyewear Cancels Offering and TSE Prime Application on Internal Controls Problem – OFF
FSS Officially Rolls Out New Ex-Div Rule for Quarterly Divs; Sammy May Finally Join the Change
Weekly Deals Digest (16 Feb) – Trend Micro, Zenhoren, HKBN, Fosun Tourism, Paragon REIT, CATL
Samsung’s 10T KRW Buyback Phase 2: The Timing of the Drop and How the Structure Is Looking
[Quiddity Index Feb25] Nikkei 225 Mar Rebal: 2 or 3 IN, 2 or 3 OUT, ~$3bn 1-Way, 1 Squeeze.
Zenhoren (5845 JP): MUFG (8306 JP)’s Partial Tender Offer

JX Advanced Metals (5016 JP) IPO: TPX Add in April; Global Idx: One in August; One in March or Sep

JX Advanced Metals (5016 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 19 March.
At the indicative IPO price of JPY 862/share, JX Advanced Metals (5016 JP) will be valued at JPY 800bn (US$5.25bn).
The stock should be added to the TOPIX INDEX at the close on 28 April while timing of inclusion in global indices will depend on domestic/overseas allocations and price moves.

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.

MUFG Partial Offer by MUFG to Buy ~50% of Small Cap Zenhoren (5845) – Watch the Back End

Friday after the close, Mitsubishi UFJ Financial (MUFG) (8306 JP) announced a partial offer to buy up to 13.026385mm shares (minimum 11.661185mm shs) of rent guarantor Zenhoren (5845 JP).
That is 49.6% but an MUFJ sub already owns 1.46%. The offer comes at a 32% premium to last. Two holders with 33.59% of the register have agreed to tender.
This will turn the company into a consolidated subsidiary of MUFG under MUFJ Nicos, the group’s consumer credit subsidiary. Shareholder structure matters. Watch the back end.

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.

Japan Eyewear Cancels Offering and TSE Prime Application on Internal Controls Problem – OFF

On Friday after the close, Japan Eyewear Holdings (5889 JP) made a short announcement that it would cancel its equity offering and TSE Prime application announced 10 Feb, discussed here.
I had suggested that the offering price, or a large dip would be a buy. I rescind that recommendation immediately.
The reason for the cancellation? “Matters that need to be confirmed in relation to our internal control system have been discovered and that will take time.”

FSS Officially Rolls Out New Ex-Div Rule for Quarterly Divs; Sammy May Finally Join the Change

Starting this year, both year-end and interim divvies follow the new rule, with ex-div dates set after the payout is confirmed.
Quarterly dividend arbitrage will heat up, especially for high-yield bank stocks, attracting traders to cash in on the spread.
Samsung Electronics is likely to update bylaws at the March AGM, with Q1 payout ex-div dates set after the dividend is confirmed.

Weekly Deals Digest (16 Feb) – Trend Micro, Zenhoren, HKBN, Fosun Tourism, Paragon REIT, CATL

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: Contemporary Amperex Technology (CATL) (300750 CH) filed for an H Share listing to raise US$5 billion, and Hexaware Technologies (HEXW IN) seeks to raise US$1 billion.
Event-Driven developments: Trend Micro Inc (4704 JP), Kaonavi Inc (4435 JP), Zenhoren (5845 JP), HKBN Ltd (1310 HK), Fosun Tourism (1992 HK), Paragon REIT (PGNREIT SP).

Samsung’s 10T KRW Buyback Phase 2: The Timing of the Drop and How the Structure Is Looking

The 2nd phase of the buyback, around 3T KRW with a 3-month window, could drop this week, likely by mid- or end-week.
The market’s worried Samsung might not retire the shares this time and could handle them differently.
The latest talk is that Samsung will retire the shares immediately, like Phase 1. This could be an inflection point for solid short-term price action—time to set up positions.

[Quiddity Index Feb25] Nikkei 225 Mar Rebal: 2 or 3 IN, 2 or 3 OUT, ~$3bn 1-Way, 1 Squeeze.

The data observation period is done. No rank changes in the top candidates since mid-Jan. Capping for Fast Retailing (9983 JP) is confirmed.
For me, it is 2 or 3 ADDs, depending. Kokusai Electric (6525 JP) is still tops. BayCurrent Consulting (6532 JP) second. Shift Inc (3697 JP) third.
Kokusai is +26.7% in 5 weeks since I wrote bullishly, despite news/confirmation of getting the boot from a global index at end-Feb. Baycurrent is +39.7% (link). Now we count flows.

Zenhoren (5845 JP): MUFG (8306 JP)’s Partial Tender Offer

Zenhoren (5845 JP) announced a partial tender offer and capital and business agreement from Mitsubishi UFJ Financial (MUFG) (8306 JP). MUFG aims to make Zenhoren a consolidated subsidiary.
The offer is for a minimum of 11.7m shares (44.36% ownership ratio) and a maximum of 13.0m shares (49.55% ownership ratio) at JPY1,000, a 31.9% premium to the last close.
Due to the irrevocable, the minimum acceptance condition requires a minority acceptance rate of 16.6%. This threshold is achievable, as the offer is reasonable.

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Feb 16

Most Read: Bestechnic Shanghai , Orica Ltd, A2 Milk Co Ltd, Eva Airways, Cambricon Technologies Lt, Delhivery , JX Advanced Metals, Japan Eyewear Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

China/HK: Passive Activity Expected Later This Month
Australia: Last Look at Potential Passive Selling in February
S&P/NZX Index Rebalance Preview: Couple of Changes in March
Taiwan Top 50 ETF Rebalance Preview: Eva Air (2618 TT) Winging Its Way In
China A50 ETFs Rebalance Preview: Three Changes in March
NIFTY MIDCAP150 Index Rebalance Preview: 15 Potential Changes in March
JX Advanced Metals (5016 JP) IPO: TPX Add in April; Global Idx: One in August; One in March or Sep
Japan Strategy Weekly | Carlyle’s Kaonavi Deal Signals a Shift in Japanese Valuations
Japan Eyewear Cancels Offering and TSE Prime Application on Internal Controls Problem – OFF
Despite DeepSeek’s Innovation, Hyperscalers Doubling Down on Capex

China/HK: Passive Activity Expected Later This Month

There could be up to 10 adds/ 29 deletes for the China global index in February. The actual number of changes will be smaller depending on the review date chosen.
The flow on the forecast adds varies from US$17.5m-US$175m (0.05x-15x ADV) while the flow on the forecast deletes varies from US$14.4m-US$100.4m (0.25x-22.75x ADV).
Bestechnic Shanghai (688608 CH) is a potential inclusion to multiple indices in June and there will be much larger passive flows to the stock then.

Australia: Last Look at Potential Passive Selling in February

There are 6 stocks in Australia that could be deleted from global passive portfolios later this month, though the probability of deletion varies across the stocks.
If deleted, passive trackers will need to sell between US$234m-330m in the stocks. Impact is high at between 7-23 days of ADV.
The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over nearly every time period from 1 week to 3 months. Shorts have increased on all stocks recently.

S&P/NZX Index Rebalance Preview: Couple of Changes in March

There could be one constituent change each for the NZX10 Index and the NZX50 Index/ NZX50 Portfolio Index in March.
The flows are limited but the impacts are huge, and the stocks could move ahead of the announcement of the changes.
A2 Milk Co Ltd (ATM NZ) is a potential inclusion to the NZX10 Index, but the inflows will be completely overshadowed by the potential deletion from a global index.

Taiwan Top 50 ETF Rebalance Preview: Eva Air (2618 TT) Winging Its Way In

Eva Airways (2618 TT) is forecast to be added to the Yuanta/P-Shares Taiwan Top 50 ETF in March, replacing Formosa Chemicals & Fibre (1326 TT).
Passive trackers will have 1 day of ADV to buy in Eva Airways (2618 TT) and over 3 days of ADV to sell in Formosa Chemicals & Fibre (1326 TT).
Positioning on Eva Airways (2618 TT) does not appear excessive while Formosa Chemicals & Fibre (1326 TT) seems to be oversold.

China A50 ETFs Rebalance Preview: Three Changes in March

With just over a week left to review cutoff, there could be three changes for the iShares A50 China (2823 HK)/ CSOP China A50 (HKD) (2822 HK) ETFs in March.
Guotai Junan Securities, Cambricon Technologies and SAIC Motor could replace CGN Power, Luzhou Laojiao and Inner Mongolia Yili Industrial Group.
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.

NIFTY MIDCAP150 Index Rebalance Preview: 15 Potential Changes in March

With the review period now complete, there could be 15 changes for the NIFTY Midcap 150 Index at the March rebalance.
Estimated one-way turnover is 8.3% resulting in a one-way trade of INR 7.65bn (US$88m). With over US$40bn tracking the index actively, the impact on the stocks will be much larger.
The outright adds have outperformed the forecast deletes over the last 6 months, but there has been underperformance this calendar year.

JX Advanced Metals (5016 JP) IPO: TPX Add in April; Global Idx: One in August; One in March or Sep

JX Advanced Metals (5016 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 19 March.
At the indicative IPO price of JPY 862/share, JX Advanced Metals (5016 JP) will be valued at JPY 800bn (US$5.25bn).
The stock should be added to the TOPIX INDEX at the close on 28 April while timing of inclusion in global indices will depend on domestic/overseas allocations and price moves.

Japan Strategy Weekly | Carlyle’s Kaonavi Deal Signals a Shift in Japanese Valuations

By Mark Chadwick

Japan’s tech market sees major movement with Carlyle’s 120% premium bid for Kaonavi, highlighting the stark valuation gap between Japanese and US SaaS companies.
Many Japanese software firms trade at significantly lower multiples (4x) versus US peers (8x), attracting private equity attention.
Japanese stocks ended the week up around 1%. Global macro concerns and inflation lifting bond yields and raising concern over a stronger yen.

Japan Eyewear Cancels Offering and TSE Prime Application on Internal Controls Problem – OFF

On Friday after the close, Japan Eyewear Holdings (5889 JP) made a short announcement that it would cancel its equity offering and TSE Prime application announced 10 Feb, discussed here.
I had suggested that the offering price, or a large dip would be a buy. I rescind that recommendation immediately.
The reason for the cancellation? “Matters that need to be confirmed in relation to our internal control system have been discovered and that will take time.”

Despite DeepSeek’s Innovation, Hyperscalers Doubling Down on Capex

By Nimish Maheshwari

Despite DeepSeek (DPSK12 CH)’s breakthrough with minimal chips, hyperscalers remain undeterred, planning $315 billion in FY25 capex to expand AI and cloud infrastructure.
This sustained high capex underlines tech giants’ confidence in long-term AI growth, ensuring a competitive edge and reinforcing their market leadership.
Investors should see this aggressive capex commitment as a signal of robust future revenue potential, even amid disruptive cost-saving innovations.

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Feb 15

Most Read: Horizon Robotics, Tokyo Metro, Kaonavi Inc, Delhivery , Contemporary Amperex Technology (CATL), Hankyu Hanshin REIT, Inc., JX Advanced Metals, Samsung Electronics, Renewi, Close Brothers and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade
TOPIX Index Upweights: An Early Preview Of “The Big April Basket” 2025
Kaonavi (4435 JP) – Small HR Software Co Gets 121% Premium LBO from Carlyle
NIFTY MIDCAP150 Index Rebalance Preview: 15 Potential Changes in March
CATL IPO Listing in Hong Kong Preview
3D Launches Partial Tender Offer on Hankyu Hanshin REIT (8977)
JX Advanced Metals (5016 JP) IPO: TPX Add in April; Global Idx: One in August; One in March or Sep
Samsung Life’s Official Move to Make Fire a Subsidiary: A Value-Up Play for Samsung’s Big Three
Macquarie/Renewi: Agreed Offer
Quiddity Leaderboard F100/F250 Mar25: High-Impact Intra-Review Additions Possible

HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade

The review period for the March rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 31 December.
There could be one constituent change in March. With capping changes, that could lead to a one-way turnover of 2.6% resulting in a round-trip trade of HK$6.88bn (US$884m).
Horizon Robotics (9660 HK) is also a potential inclusion to the HSCI Index in March, though inclusion in Southbound Stock Connect will only come through in May.

TOPIX Index Upweights: An Early Preview Of “The Big April Basket” 2025

By Janaghan Jeyakumar, CFA

The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2025.

Kaonavi (4435 JP) – Small HR Software Co Gets 121% Premium LBO from Carlyle

Another Japanese smallcap takeover at a huge premium. Must be a day ending in “y.” It is a thing recently.
Interestingly, this is NOT an MBO. It is an LBO. Carlyle is buying out Kaonavi Inc (4435 JP) at ¥4,380/share which is 19x book and 89x EBIT. Nice price.
I expect this gets done easily because the co-CEO with 28.7% and Recruit with 20.6% are putting in. There’s another easy 9.7%. One more holder and this is done.

NIFTY MIDCAP150 Index Rebalance Preview: 15 Potential Changes in March

With the review period now complete, there could be 15 changes for the NIFTY Midcap 150 Index at the March rebalance.
Estimated one-way turnover is 8.3% resulting in a one-way trade of INR 7.65bn (US$88m). With over US$40bn tracking the index actively, the impact on the stocks will be much larger.
The outright adds have outperformed the forecast deletes over the last 6 months, but there has been underperformance this calendar year.

CATL IPO Listing in Hong Kong Preview

By Douglas Kim

Contemporary Amperex Technology (CATL) is getting ready to complete its IPO on the Hong Kong exchange. CATL is expected to raise at least US$5 billion.
CATL maintained its 36.8% share in the global EV battery market in 2023 and January to November 2024. CATL has excellent fundamentals and improving profit margins.
Major risk factors include additional tariffs by the US, recent addition to Pentagon’s blacklist, declining sales in 2024, and lower government subsidies for EVs globally.

3D Launches Partial Tender Offer on Hankyu Hanshin REIT (8977)

For the second time in 3 weeks, 3D Investment Partners has launched, unannounced, a Partial Tender Offer for pure investment purposes, for a 10-15% stake in a REIT.
Last time it was NTT UD REIT Investment Corporation (8956 JP). This time it is Hankyu Hanshin REIT, Inc. (8977 JP).
The trade last time was to sell NTT UD on the pop and replace with peers. That has worked. The trade is probably the same here.

JX Advanced Metals (5016 JP) IPO: TPX Add in April; Global Idx: One in August; One in March or Sep

JX Advanced Metals (5016 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 19 March.
At the indicative IPO price of JPY 862/share, JX Advanced Metals (5016 JP) will be valued at JPY 800bn (US$5.25bn).
The stock should be added to the TOPIX INDEX at the close on 28 April while timing of inclusion in global indices will depend on domestic/overseas allocations and price moves.

Samsung Life’s Official Move to Make Fire a Subsidiary: A Value-Up Play for Samsung’s Big Three