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• A year ago, SBI Shinsei Bank (8303 JP)‘s new MTMP was to get from ¥35bn profit in FY22 to ¥70bn in FY24 including ¥55bn of organic profit, ¥15bn of synergies.
• On Friday, SBI Shinsei announced FY22 would be ¥42bn instead of ¥35bn, despite higher interest rates. More aggressive lending and gains in subs were credited. 
• The MTMP calls for ¥70bn Profit in Mar-25 – ¥341 EPS so Friday’s close x 7.1x. The big picture takeout scenario remains intact and Real World Float is still small. 

• AAG Energy Holdings (2686 HK) is one of those periodic (and rare) takeover situations that will likely be remembered for what went wrong rather than what went right.  
• A low-balled Offer (proxy advisors agree); perfunctory IFA analysis; a large, and silent, shareholder; and the postponement of the Scheme vote due to voting instructions not being “duly processed”.
• A new Court Meeting has been confirmed for the 2 June. And now we have some odd CCASS movements which raise further questions.

In this upcoming flash webinar, Insight Provider Travis Lundy will discuss the recent privatisation offer from SBI Holdings (8473 JP) for SBI Shinsei Bank (8303 JP). Japan’s SBI Holdings Inc said last Friday that it would take SBI Shinsei Bank private by launching a 154.2 billion yen (US$1.14 billion) tender offer, at 2,800 yen per share. Travis will go over the background and opportunities ahead of Monday’s Japan trading hours.

The Webinar will be hosted on Monday, 15 May 2023, 07:30 SGT.

Travis Lundy has 20+ years of experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies, with most of that time spent managing money.

• Marubeni (8002 JP) and Secom (9735 JP) today announced a Tender Offer to take private Marubeni’s subsidiary ARTERIA Networks Corp (4423 JP) at a 54% premium to the close. 
• Listed 4.5yrs ago, the company hasn’t grown hugely. Revenue growth is slow. EBITDA growth is flat. The takeout is 3.6x book, 7x estimated EBITDA, and about mid-teens PER. Without synergies.
• The price is OK, not great. The Board rejected the final price because it was too low and didn’t include synergies, then accepted because the bidders wouldn’t go further? Hmmm…

• The severity of yesterday’s ruling has caught the market’s attention as it may provide insight into an ongoing investigation into insider trading based on undisclosed internal information.
• This matter is not limited to the operational risk caused by the imprisonment of Lee Dong-chae. There is a possibility that it could lead to delisting, depending on the circumstances.
• The substantial legal risk that could lead to delisting will further amplify price volatility. Adopting a more segmented approach appears crucial, like specific setups in each tighter interval.

• We believe Toshiba guidance could be meaningfully lower than consensus estimates project. 
• While we expect some conservatism across industrial segments this could easily be offset by prolonged stagnation on the tech side. 
• Given concerning signs for NAND we believe weak guidance could shake confidence in deal funding.

• AmoreG has been closely moving relative to Amorepacific Corp (090430 KS) over the past few months, but starting from mid-April, it rapidly entered a downward diversion phase.
• It appears to have experienced greater sensitivity towards the recent tensions in Sino-Korean relations, possibly due to its higher price correlation with the Chinese market.
• The issue lies in the timing of entry aimed at reversion, and there may be one upcoming passive inflow event that we should pay attention to in this regard.

• Ushio Inc (6925 JP) reported earnings on 11 May, with revenue +17.6% on the year, OP +21.4%, and NP +8.7% on the year. Div was unchanged at ¥50/share.
• Forecasts are for revenue +7.4%, OP -21.2%, and NP -27% (¥90.6/EPS). But importantly, the company also announced a HUUUUUGE Buyback. 
• Buying ≦20mm shares (17.0%) spending ≦¥30bn from 29May2023 to 10May2024. That’s 13.3% at the 12 May close. How this will work is unknown. There’s less detail than one would want.

• Horizon Construction Development (1887128D HK)/HCD, a subsidiary of Far East Horizon (3360 HK), has launched its HKEx listing at HK$4.52-4.80 per share to raise up to US$223 million.
• We previously discussed the IPO in Horizon Construction Development IPO: The Bull Case and Horizon Construction Development IPO: The Bear Case. 
• Our valuation analysis suggests that HCD is fully priced at the IPO price range. Therefore, we are inclined to pass on the IPO. 

• After abandoning its reverse merger, St Barbara (SBM AU) confirmed it will sell its flagship Leonora gold project to Genesis Minerals (GMD AU) for $600mn (cash and GMD scrip).
• That transaction appeared all stitched up, until Silver Lake Resources (SLR AU) gatecrashed the party with a non-binding proposal for the Leonara asset. SBM’s board rejected the competing proposal. 
• SLR has now tweaked terms to address SBM concerns. Back in SBM’s court. GMD has matching rights if SBM sides with SLR.

• The HDFC Bank (HDFCB IN) / HDFC Limited (HDFC IN) merger will result in capping and funding changes on the Nifty Bank Index (NSEBANK INDEX) constituents.
• We estimate one-way turnover of around 8.4% resulting in a one-way trade of INR 21,865m (US$266m) at the time of merger implementation.
• The impact in terms of ADV is less than 1x on all stocks, but the impact in terms of delivery volume is higher than 1x on a few stocks.

• Allkem Ltd (AKE AU) and Livent (LTHM US) are combining in an all-stock merger of equals to create a global lithium chemicals producer.
• Allkem Ltd (AKE AU) shareholders will receive 1 NewCo share for each Allkem share held while Livent (LTHM US) shareholders will receive 2.406 NewCo shares for each Livent share held.
• The merger will have implications for the stocks in the MSCI, S&P/ASX, thematic, and other global indices at the time of implementation.

• Today, after the close, ASX-listed Allkem Ltd (AKE AU) (formerly known as Orocobre, which merged with Galaxy Resources in 2021) announced it would merge with Livent (LTHM US). 
• At US$10bn, this “merger-of-equals” NEWCO (pro-forma US$1.9bn revenue, US$1.2bn EBITDA), with NYSE primary listing and foreign entity listing on the ASX, would be a global lithium player. Deal closing end-2023.
• The doc (243 pages) and presentation (42p) are worth reading. There are interesting index effects, and there may be “Lithium Risk” in this deal for arbs, but it looks good.

• Nikkei has started a market consultation on amendments to the methodology of the Nikkei 225 (NKY INDEX) focusing on the stepwise addition of lower liquidity stocks and on technical listings.
• Stocks that have relatively low ADTV compared to the expected index weight will be added at half the originally planned PAF with the full PAF implemented at the next review.
• If the proposed changes are implemented, some of the potential inclusions in September will be added at half their PAF with the increase to full PAF coming in March 2024.

• Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
• CELSYS (3663 JP) (formerly known as “Artspark”) is a name we have been Bullish on in the last few months as it was a high-probability TOPIX Inclusion candidate.
• In the last couple of trading days, the stock has popped more than 30%. In this insight, we take a closer look at this situation.

• Marubeni (8002 JP) and Secom (9735 JP) today announced a Tender Offer to take private Marubeni’s subsidiary ARTERIA Networks Corp (4423 JP) at a 54% premium to the close. 
• Listed 4.5yrs ago, the company hasn’t grown hugely. Revenue growth is slow. EBITDA growth is flat. The takeout is 3.6x book, 7x estimated EBITDA, and about mid-teens PER. Without synergies.
• The price is OK, not great. The Board rejected the final price because it was too low and didn’t include synergies, then accepted because the bidders wouldn’t go further? Hmmm…

• KG Mobility belongs to the Consumer Discretionary sector, and if we consider its market cap on April 28th, it comfortably qualifies for inclusion in KOSPI 200 in the upcoming review.
• Although the KOSPI 200 eligibility rules do not explicitly prohibit a stock based on such short trading periods, there is a chance that KRX might exercise its discretionary provision (6.1.2).
• There is another significant event approaching us. As per current market cap levels, there is a high chance of KG Mobility being included in the KRX Auto Index in September.

• Aussie lithium miner Allkem Ltd (AKE AU) has inked a $US10bn+ merger with Livent (LTHM US) to form the world’s fifth largest lithium producer.
• Travis Lundy tackled this “merger-of-equals” and the index implications in Allkem/Livent (AKE AU | LTHM US) Merger Of Lithium Equals Has Index Surprises. 
• The spoils of ongoing lithium demand for electric vehicle batteries will ostensibly go to the prevalent, low-cost producer. Yet Livent shareholders may question the lack of premium in the transaction. 

• ARTERIA Networks Corp (4423 JP) has recommended Marubeni Corp (8002 JP) and Secom Co Ltd (9735 JP)’s tender offer of JPY1,980 per share, a 54.1% premium to the undisturbed price.
• The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 16.61% ownership ratio.
• The offer is conditional on Chinese and Japanese regulatory approvals. The minimum acceptance condition requires a 33% minority acceptance rate. This is doable as the tender price is attractive. 

• Back on the 1 January, Shandong Xinjufeng Technology Packaging (301296 CH) sought to acquire Jardine Matheson Holdings (JM SP)‘s 28.22% stake in Greatview Aseptic Packaging (468 HK) at HK$2.65/share.
• It was hardly a knockout price. However, Mathson had been itching to exit. Even if it involved selling its stake to one of Greatview’s competitor. 
• Greatview’s board is unimpressed, and now reckons Matheson’s initial buy-in may be in breach of PRC anti-monopoly laws. 

• The review period for the September rebalance of the KOSPI Size Indices will run from 1 June to 31 August. The changes will be implemented at the close 7 September.
• We see 6 migrations from MidCap to LargeCap, 56 migrations from LargeCap to MidCap, 2 new adds to MidCap, and 11 migrations from SmallCap to MidCap.
• Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.

• Today, after the close, ASX-listed Allkem Ltd (AKE AU) (formerly known as Orocobre, which merged with Galaxy Resources in 2021) announced it would merge with Livent (LTHM US). 
• At US$10bn, this “merger-of-equals” NEWCO (pro-forma US$1.9bn revenue, US$1.2bn EBITDA), with NYSE primary listing and foreign entity listing on the ASX, would be a global lithium player. Deal closing end-2023.
• The doc (243 pages) and presentation (42p) are worth reading. There are interesting index effects, and there may be “Lithium Risk” in this deal for arbs, but it looks good.

• Allkem Ltd (AKE AU) and Livent (LTHM US) are combining in an all-stock merger of equals to create a global lithium chemicals producer.
• Allkem Ltd (AKE AU) shareholders will receive 1 NewCo share for each Allkem share held while Livent (LTHM US) shareholders will receive 2.406 NewCo shares for each Livent share held.
• The merger will have implications for the stocks in the MSCI, S&P/ASX, thematic, and other global indices at the time of implementation.

• On 8 May, CUBox (340810 KS) announced its IPO price of 15,000 won, which is 13% lower than the lower end of the IPO price range of 17,200 won.
• Our base case valuation of CUBox is implied target price of 22,719 won per share, which represents 51% higher than the IPO price of 15,000 won.
• CUBox claims that it has one of the world’s best technologies in the field of AI face recognition. 

• In this insight, we discuss the potential inclusions and exclusions that the locals are highlighting for the KOSPI 200 and KOSDAQ 150 rebalance in May 2023. 
• The top five best performing stocks YTD that are expected to be included in either KOSPI200 and KOSDAQ150 include Rainbow Robotics, Kumyang, Cosmo Chemical, Yunsung F&C, and Posco M Tech.
• In the coming weeks, there is a higher probability these five stocks underperform the market on average as many investors sell the news on them getting included in these indices. 

• The HDFC Bank (HDFCB IN) / HDFC Limited (HDFC IN) merger will result in capping and funding changes on the Nifty Bank Index (NSEBANK INDEX) constituents.
• We estimate one-way turnover of around 8.4% resulting in a one-way trade of INR 21,865m (US$266m) at the time of merger implementation.
• The impact in terms of ADV is less than 1x on all stocks, but the impact in terms of delivery volume is higher than 1x on a few stocks.

• Mitsubishi Corp (8058 JP) yesterday announced earnings, forecast for FY23, higher dividend guidance, and a buyback. The headline number is 6% of shares and ¥300bn (which is nearer 4% now).
• ¥200bn of that ¥300bn is actually FY2022 “Additional Return” tacked onto a ¥100bn buyback for this year (FY23).  
• As is often the case, Shareholder Structure Matters. Because Berkshire Hathaway owns a large chunk of stock (7.4% according to interviews), that carves out a fair chunk not for sale.

• Timing is everything. Yesterday afternoon I flagged Inner Mongolia Yitai Coal Company Ltd (3948 HK)‘s possible H-share buyback at HK$17/share.
• Roughly five hours later a firm HK$17.50/share Offer was announced. The Offer Price is final.
• Other terms and approvals were largely as expected. Payment under the Offer may occur mid-August.

• Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
• CELSYS (3663 JP) (formerly known as “Artspark”) is a name we have been Bullish on in the last few months as it was a high-probability TOPIX Inclusion candidate.
• In the last couple of trading days, the stock has popped more than 30%. In this insight, we take a closer look at this situation.

• Allkem Ltd (AKE AU) and Livent (LTHM US) announced a merger of equals. AKE shareholders receive 1 NewCo share per AKE share, LTHM shareholders get 2.406 NewCo shares per LTHM share.
• The transaction is expected to close by the end of calendar year 2023 subject to shareholder (AKM and LTHM) and regulatory approvals. 
• The merger is sensible as NewCo will have scale, synergies and capital efficiency. AKE shareholders benefit from an attractive merger ratio and potential rerating from a US listing. 

• Japanese companies are buying back more stock than ever before, and recent moves by the TSE and METI are effectively pushing for more.
• The new goal is to lift PBR and ROE. The easiest way to lift ROE is reduce E. Low-PBR Cos with excess assets and cross-holdings (outbound and inbound) are targets.
• In this insight I look at several possible rankings for potential large buyback targets.

• As of 8 May, we see three potential changes to the iShares China Large-Cap (FXI) (FXI US) at the June rebalance. This is mainly driven by the inclusions.
• There is over 1 day of ADV to trade on all stocks with the largest impact on BeiGene Ltd (6160 HK) at nearly 4 days of ADV.
• Short interest has been increasing on the potential adds as they have run up a lot in the last few months.

• The review period for the June rebalance ends on 31 May. Announcement of the changes will be made on 9 June with implementation at the close on 16 June.
• There could be 4 or 5 A-share additions due to their inclusion in Northbound Stock Connect. That in turn expands the universe and could result in up to 3 deletions.
• If all changes go through as expected, estimated one-way turnover at the rebalance will be 15.1% resulting in a one-way trade of US$99m.

• We believe Kioxia’s results present a significant risk to financing for JIP’s Toshiba bid. 
• Recent commentary from companies increasingly points to the potential for an L-shaped recovery rather than a U-shaped one. 
• In addition, if conditions remain as challenging as they have been or worsen it is not inconceivable for Kioxia to require more capital.

• Toshiba Corp (6502 JP) reports FY2022 results on 12 May. Since the announcement of Japan Industrial Partners (JIP)’s pre-conditional tender offer of JPY4,620 per share, there have been no progress updates. 
• The spread to the offer is currently 4.2%, suggesting a reasonable probability of success. However, the offer’s success ultimately depends on shareholder backing, particularly from the activists on the register.
• Shareholder support continues to pose a considerable risk as the peers have re-rated, the offer’s price ratio remains unattractive and the declining premium of the offer’s implied multiple vs peers.

• Activist Strategic Capital has made shareholder noise at civil engineer-road infra company Seikitokyu Kogyo (1898 JP) for years. Two years ago I wrote about Seikitokyu as “A REALLY Cheap Company.”
• When I wrote, it was ¥885/share. 23 months later it was ¥824/share having paid ¥60/share over two years. Despite having bought back 10% of shares outstanding in the interim.
• Today they announced a radical new Shareholder Return Policy. It is worth reading in detail. The insight is labelled BEARISH for a specific reason. That’s a detail too. 

• Back on the 29 March, Inner Mongolia Yitai Coal Company Ltd (3948 HK) announced a possible H-share buyback at HK$17/share, a 50.4% premium to the undisturbed price.
• Yitai Coal is PRC-incorporated, therefore it is not afforded compulsory acquisition rights. To buy back ALL H-shares, either a Merger by Acquisition or a Voluntary Conditional Offer is required.
• The Offer/buyback, should it proceed, is subject to various PRC regulatory approvals, including SAFE; together with approval from Yitai Coal’s A/H shareholders. To date, the SAFE Registration has been completed.

• Last year, fintech-wannabe Marui Group (8252 JP) announced a large buyback as part of its ¥100bn distribution to shareholders in its MTMP, then increased the size
• They repurchased ¥26bn of shares. Today they announced the return of ¥50bn this year including a ¥40bn buyback. And having arrived at their optimal balance sheet structure, a new policy.
• That’s 10% of market cap and 11.6% of shares. And again a delayed start. And as always, shareholder structure matters. In this case a lot.

• Kawasaki Kisen Kaisha (9107 JP) has been a high conviction long since early November when it reported Q2 earnings and a buyback. Buyback executed, they upped the dividend.
• At Q3, earnings were downgraded from ¥700bn to ¥650bn on container biz weakness. FY22 ended at ¥695bn. March 2024 had been forecast at ¥106bn, the forecast is now ¥120bn.
• The dividend has been “lowered” to ¥200/share, which is higher than expected. That’s for this year.

• 646 listed companies (28.5%) in Korea have modified their articles of incorporation this March to prioritize determining the dividend amount before setting the dividend record date.
• New practices will arise involving the use of single-stock futures for arbitrage trading through baskets among major high-dividend companies whose dates of the dividend records overlap.
• It will be crucial to keep track of the dividend record dates with precision. In this connection, KLCA and KOSDAQCA will create a website monitoring this information.

• Japanese companies are buying back more stock than ever before, and recent moves by the TSE and METI are effectively pushing for more.
• The new goal is to lift PBR and ROE. The easiest way to lift ROE is reduce E. Low-PBR Cos with excess assets and cross-holdings (outbound and inbound) are targets.
• In this insight I look at several possible rankings for potential large buyback targets.

• There is only one new listing as a potential inclusion to the HSCI in June. If added to the HSCI, it will also be added to Southbound Stock Connect.
• There are 18 potential inclusions and 19 potential deletions for the HSCI in September. There are a few close adds and there could be another 5 deletions on Prolonged Suspension.
• A lot of the potential deletions have large Southbound holdings. With all the stocks becoming sell-only, there could be unwinding of some positions over the next couple of months.

• With two weeks left to the cutoff, there could be 5 changes to the Yuanta/​P-Shares Taiwan Dividend Plus ETF in June.
• Apart from the adds/deletes, there will also be capping and funding flows that will lead to an estimated one-way turnover of 13.5% and a one-way trade of US$886m.
• There are 9 stocks with at least 5 days ADV to trade from passive trackers and another 12 stocks that have at least 1 day ADV to trade.

• For years I have tracked investor category flows in Japanese stocks because I find them quite informative. I write about them every so often in an insight series JAPAN FLOW.
• The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically and that correlates well to one relatively simple indicator. 
• The policy backdrop points to greater corporate buying, greater foreign flow, greater selling by individuals and trust banks. The current timing probably matches. 

• Chinese authorities have begun to ban public opinion against non-state-owned companies.
• These actions were the opposite to what the authorities did in past years.
• We believe the authorities need non-state-owned companies to bail the unemployed young people out of the weak job market.

• AAG Energy Holdings (2686 HK) is one of those periodic (and rare) takeover situations that will likely be remembered for what went wrong rather than what went right.  
• A low-balled Offer (proxy advisors agree); perfunctory IFA analysis; a large, and silent, shareholder; and the postponement of the Scheme vote due to voting instructions not being “duly processed”.
• A new Court Meeting has been confirmed for the 2 June. And now we have some odd CCASS movements which raise further questions.

• The review period for the June rebalance ends on 31 May. Announcement of the changes will be made on 9 June with implementation at the close on 16 June.
• There could be 4 or 5 A-share additions due to their inclusion in Northbound Stock Connect. That in turn expands the universe and could result in up to 3 deletions.
• If all changes go through as expected, estimated one-way turnover at the rebalance will be 15.1% resulting in a one-way trade of US$99m.

• Back on the 23 December, Skyworth Group (751 HK) announced another partial buyback – this time for 100mn shares (3.87% of shares out), at HK$3.80/share, a 20.25% premium to undisturbed.  
• On the 28 March, terms were bumped to $5.00/share. Independent shareholders approved the whitewash waiver on the 5 May.
• The Offer closes on the 18 May. The minimum proration is 7.8%. Expect the final proration to be higher. 

• As of 8 May, we see three potential changes to the iShares China Large-Cap (FXI) (FXI US) at the June rebalance. This is mainly driven by the inclusions.
• There is over 1 day of ADV to trade on all stocks with the largest impact on BeiGene Ltd (6160 HK) at nearly 4 days of ADV.
• Short interest has been increasing on the potential adds as they have run up a lot in the last few months.

• Hailan Holdings (2278 HK) disclosed a voluntary conditional offer from its controlling shareholder at HK$3.36 per share, a 5.0% premium to the undisturbed price.
• The offer is conditional on a 90% minimum acceptance condition which requires a minority acceptance rate of 60.0%. The offeror/concert parties own 75.0% of shares.
• The offeror aims to exercise compulsory acquisition rights (requires 90% minority acceptance rate) which suggests a bump is possible. The offer price has not been declared final. 

• Japanese companies are buying back more stock than ever before, and recent moves by the TSE and METI are effectively pushing for more.
• The new goal is to lift PBR and ROE. The easiest way to lift ROE is reduce E. Low-PBR Cos with excess assets and cross-holdings (outbound and inbound) are targets.
• In this insight I look at several possible rankings for potential large buyback targets.

• There is only one new listing as a potential inclusion to the HSCI in June. If added to the HSCI, it will also be added to Southbound Stock Connect.
• There are 18 potential inclusions and 19 potential deletions for the HSCI in September. There are a few close adds and there could be another 5 deletions on Prolonged Suspension.
• A lot of the potential deletions have large Southbound holdings. With all the stocks becoming sell-only, there could be unwinding of some positions over the next couple of months.

• With two weeks left to the cutoff, there could be 5 changes to the Yuanta/​P-Shares Taiwan Dividend Plus ETF in June.
• Apart from the adds/deletes, there will also be capping and funding flows that will lead to an estimated one-way turnover of 13.5% and a one-way trade of US$886m.
• There are 9 stocks with at least 5 days ADV to trade from passive trackers and another 12 stocks that have at least 1 day ADV to trade.

• Aag Energy Holdings (2686 HK)’s disclosed a revised timetable to vote on Xinjiang Xintai Natural Gas (603393 CH)’s HK$1.85 offer. The new scheme meeting is set for 2 June. 
• Our analysis suggests that in the best case, Xinjiang Xintai would need to further swing NO votes representing 6.52%-8.34% of outstanding shares to YES to get the scheme approved. 
• AAG’s case is unprecedented. The risk-reward remains unattractive as the upside to a scheme pass (13.5% upside) is equal to the downside to a scheme fail (average 13.5% downside).

• Kum Yang IR director Park once mentioned that the block deals to sell the 2M treasury shares would likely occur in late May or early June.
• There has been speculation in the market that the timing of the block deal may be postponed until after its inclusion in the KOSPI 200, allowing for short selling.
• Considering the immediate funding needs faced by the company, setting an aggressive approach to shorting from shortly after its inclusion in the KOSPI 200 would be reasonable regarding entry timing.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads 111 Inc (YI US), Estia Health (EHE AU), United Malt Group Ltd (UMG AU), Aag Energy Holdings (2686 HK),Origin Energy (ORG AU), Metro Pacific Investments Co (MPI PM).
• Lowest spreads  Liontown Resources (LTR AU), Healius (HLS AU), Penguin International (PBS SP), Lian Beng (LBG SP), Mincor Resources NL (MCR AU), Blackmores Ltd (BKL AU), Arcland Service (3085 JP).

• The Korean local sector ETF with the fastest growing AUM is TIGER Fn Semiconductor Top 10 ETF, whose AUM has increased more than twice over the past two months.
• HPSP (403870 KS) will replace Tokai Carbon Korea (064760 KS) by a comfortable margin in the upcoming review in October.
• From a day trading perspective, this presents a significant Long-Short opportunity. Considering the relatively sizeable passive impact size, setting an entry point more aggressively may not be a bad idea.

• There have been some changes to my expectations for the TWSE Div+ index June 2023 index changes and capping flows.
• I currently see 5 ADDs/DELs. Some of these names are different from the ones I specified in my previous insight.
• In this insight, we take a look at my latest flow expectations.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• Nexus Select Trust will open books for India’s first Retail REIT, just as the first major India IPO for the year, Mankind Pharma seeks to list.
• There was only Ventia (VNT AU) placement during the week, along with Giant Biogene Holding (2367 HK) lockup expiry.

• For years I have tracked investor category flows in Japanese stocks because I find them quite informative. I write about them every so often in an insight series JAPAN FLOW.
• The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically and that correlates well to one relatively simple indicator. 
• The policy backdrop points to greater corporate buying, greater foreign flow, greater selling by individuals and trust banks. The current timing probably matches. 

• The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
• There are potential changes to some of the indices and then there are close changes that will result in big flows if they eventuate.
• The March rebalance saw some funky moves on the stocks that had big flows and we could see more of that at the September rebalance.

• Friday marked the end of the review cutoff for the MSCI, CSI300, CSI500, STAR50, SSE50, ChiNext and a bunch of other indices for the upcoming rebalances in May and June.
• There are no major index events coming up this week as a lot of markets are shut on different days.
• There were big inflows to mainland China ETFs during the week, while there was a big redemption from the iShares MSCI ACWI ETF (ACWI US). 

• The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 31 July.
• Potential adds are Adaro Minerals (ADMR IJ), Bumi Resources Minerals (BRMS IJ), Panin Financial (PNLF IJ), Energi Mega Persada (ENRG IJ), Transcoal Pacific (TCPI IJ) and Pertamina Geothermal Energy (PGEO).
• Potential deletions are Japfa Comfeed Indonesia (JPFA IJ), Indocement Tunggal Prakarsa (INTP IJ), Timah Persero (TINS IJ), Bank Tabungan Negara Persero (BBTN IJ) and Chandra Asri Petrochemical (TPIA IJ). 

• Halfway through the review period, we see 5 potential changes for the Nifty Next 50 Index (NIFTYJR INDEX)/ Nifty 100 Index (NSE100 INDEX) at the September rebalance.
• All the potential adds are expected to migrate from MidCap to LargeCap at the AMFI June reclassification, while we expect two of the potential deletes to move the other way.
• Of the potential deletes, one is a high probability deletion from the MSCI India Index at the May QCIR while there is another that is a lower probability deletion.

• Toshiba is trading at a 12-13% annualised return on the arb when using the expected Tender Offer Start Date proposed in the Takeover Announcement on 23 March 2023.
• On Day 1-2 post-announcement, Toshiba traded at an 11-13% annualised spread. Since the announcement, a 12-name Peer Basket is up 11+% meaning Toshiba back end risk has shrunk.
• Forward consensus EPS ratios have fallen, in part due to the shift forward one fiscal year by comps. We’ll see where those lie in a week when earnings come.

• Two thirds of the way through the review period, we forecast two changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the June rebalance.
• Thai Life Insurance (TLI TB) and WHA Corp Pcl (WHA TB) could replace Jaymart PCL (JMART TB) and Ngern Tid Lor (TIDLOR TB).
• JMT Network Services (JMT TB) is a very close delete on market cap, while Intouch Holdings (INTUCH TB) is a close delete on liquidity. Multiple possibilities here.

• Ventia (VNT AU) completed an A$300m placement overnight with Apollo and CIMIC Group Ltd (CIM AU) selling around 14% of the shares outstanding at a small discount to the close.
• The placement will significantly increase Ventia (VNT AU)‘s float and make the stock a high probability inclusion to the S&P/ASX 200 (AS51 INDEX) at the June rebalance.
• We now expect two changes to the S&P/ASX 200 (AS51 INDEX) in June and the impact on the stocks is over 5.5 days of ADV to trade.

• It was recently reported that Choi Mun-Ho (CEO of Ecopro BM) sold 2,000 shares of Ecopro BM Co Ltd (247540 KS) at 254,000 won per share.
• It was also recently announced that Eroom T&C, the family company of Lee Dong-Chae, the chairman of Ecopro Group, also sold shares of Ecopro BM.
• Recent selling of Ecopro BM shares by CEO Choi Mun-Ho and Ecopro affiliate Eroom T&C are negative signs on the Ecopro BM. Lofty valuations are also negative on Ecopro BM. 

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• During 2022, BNC Korea (256840 KS) reported gross profit margin of 48.3%, lower than 51.9% reported in 2021, as increasing competition is leading to price erosion of botulinum toxin products.
• In March 2023, prosecutors have indicted BNC Korea for allegedly selling botulinum toxin injections to exporters without the approval of the MFDS from December 2015 to December 2021.
• With the pandemic on a downward trend for more than a year now, we are skeptical about BNC Korea’s in-licensed COVID-19 drug candidate for a milestone payment of $15M.

• Foreign shareholding has dropped in HDFC Limited and increased in HDFC Bank – the net effect is an increase in foreign room to just north of 18%.
• The merger is expected to complete in Q2/Q3 when there will be buying from MSCI trackers. There will be adhoc inclusions to the NIFTY, Nifty Next 50 and SENSEX indices.
• HDFC Limited (HDFC IN) trades 1.39% below the merger ratio with HDFC Bank (HDFCB IN) and also at a lower price to book.

• The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
• There are potential changes to some of the indices and then there are close changes that will result in big flows if they eventuate.
• The March rebalance saw some funky moves on the stocks that had big flows and we could see more of that at the September rebalance.

• The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 31 July.
• Potential adds are Adaro Minerals (ADMR IJ), Bumi Resources Minerals (BRMS IJ), Panin Financial (PNLF IJ), Energi Mega Persada (ENRG IJ), Transcoal Pacific (TCPI IJ) and Pertamina Geothermal Energy (PGEO).
• Potential deletions are Japfa Comfeed Indonesia (JPFA IJ), Indocement Tunggal Prakarsa (INTP IJ), Timah Persero (TINS IJ), Bank Tabungan Negara Persero (BBTN IJ) and Chandra Asri Petrochemical (TPIA IJ). 

• Toshiba is trading at a 12-13% annualised return on the arb when using the expected Tender Offer Start Date proposed in the Takeover Announcement on 23 March 2023.
• On Day 1-2 post-announcement, Toshiba traded at an 11-13% annualised spread. Since the announcement, a 12-name Peer Basket is up 11+% meaning Toshiba back end risk has shrunk.
• Forward consensus EPS ratios have fallen, in part due to the shift forward one fiscal year by comps. We’ll see where those lie in a week when earnings come.

• Halfway through the review period, we see 5 potential changes for the Nifty Next 50 Index (NIFTYJR INDEX)/ Nifty 100 Index (NSE100 INDEX) at the September rebalance.
• All the potential adds are expected to migrate from MidCap to LargeCap at the AMFI June reclassification, while we expect two of the potential deletes to move the other way.
• Of the potential deletes, one is a high probability deletion from the MSCI India Index at the May QCIR while there is another that is a lower probability deletion.

• Two thirds of the way through the review period, we forecast two changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the June rebalance.
• Thai Life Insurance (TLI TB) and WHA Corp Pcl (WHA TB) could replace Jaymart PCL (JMART TB) and Ngern Tid Lor (TIDLOR TB).
• JMT Network Services (JMT TB) is a very close delete on market cap, while Intouch Holdings (INTUCH TB) is a close delete on liquidity. Multiple possibilities here.

• Ventia (VNT AU) completed an A$300m placement overnight with Apollo and CIMIC Group Ltd (CIM AU) selling around 14% of the shares outstanding at a small discount to the close.
• The placement will significantly increase Ventia (VNT AU)‘s float and make the stock a high probability inclusion to the S&P/ASX 200 (AS51 INDEX) at the June rebalance.
• We now expect two changes to the S&P/ASX 200 (AS51 INDEX) in June and the impact on the stocks is over 5.5 days of ADV to trade.

• A SELL note from a broker on Ecopro BM Co Ltd (247540 KS) was a key reason for the 7% and 8+% fall for Ecopro Co Ltd (086520 KS) .  
• Is this finally start of the end of the rally for the poster boy for Korean EV 
• When will earnings matter and what are the catalysts that could start the downfall?

• Japan Tobacco’s 1Q23 performance exceeded consensus expectations, with revenue and OP surpassing by 5.3% and 12.3%, respectively.
• Consensus expected no volume growth for Japan Tobacco in declining combustible tobacco market; targeted mid-single digit constant currency revenue growth via pricing.
• Higher cigarette prices are expected to contribute to Japan Tobacco (2914 JP)‘s OP growth, which we anticipate will exceed its historical peak levels in the next few years.

• On the 21st January 2021, Singapore-based builder and operator of aluminum high-speed boats Penguin International (PBS SP) announced a Voluntary Conditional Offer from its Chairman and Dymon Group at S$.65/share. 
• In Penguin International (PBS SP): Friendly Privatization Deal Might Need A BumpJanaghan Jeyakumar expected a bump in terms. No to be, and the Offeror held 80.05% at the close.
• The Offeror, via a new vehicle, has returned to the fold with a S$0.82/share Offer Price. The Offer is unconditional. This is done.

• The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
• There are potential changes to some of the indices and then there are close changes that will result in big flows if they eventuate.
• The March rebalance saw some funky moves on the stocks that had big flows and we could see more of that at the September rebalance.

• According to Chosun, KRX plans to list the single-stock futures of all constituents of KOSPI 200 and KOSDAQ 150 within 2-3 years.
• This information comes from a KRX official, who directly confirmed it. As Chosun is the most well-established news outlet in Korea, the credibility of this article is quite high.
• We should consider screening those with a high proportion of short-selling positions and devising a positioning strategy in conjunction with the new listing event of single stock futures in July.

• Two thirds of the way through the review period, we forecast two changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the June rebalance.
• Thai Life Insurance (TLI TB) and WHA Corp Pcl (WHA TB) could replace Jaymart PCL (JMART TB) and Ngern Tid Lor (TIDLOR TB).
• JMT Network Services (JMT TB) is a very close delete on market cap, while Intouch Holdings (INTUCH TB) is a close delete on liquidity. Multiple possibilities here.

• Toshiba is trading at a 12-13% annualised return on the arb when using the expected Tender Offer Start Date proposed in the Takeover Announcement on 23 March 2023.
• On Day 1-2 post-announcement, Toshiba traded at an 11-13% annualised spread. Since the announcement, a 12-name Peer Basket is up 11+% meaning Toshiba back end risk has shrunk.
• Forward consensus EPS ratios have fallen, in part due to the shift forward one fiscal year by comps. We’ll see where those lie in a week when earnings come.

• Penguin International (PBS SP) has disclosed a voluntary unconditional offer from Dymon Asia, Executive Chairman and Managing Director at S$0.82 per share, a 15.5% premium to the undisturbed price. 
• The offer price is attractive, represents an 8-year share price high, and is shy of the 10-year high of S$0.825. It is also 26.2% higher than the 2021 offer.
• The offeror aims to privatise Penguin. Hitting the 90% compulsory acquisition threshold implies a minority acceptance rate of around 44%, which is eminently achievable due to an attractive offer.

• Ventia (VNT AU) completed an A$300m placement overnight with Apollo and CIMIC Group Ltd (CIM AU) selling around 14% of the shares outstanding at a small discount to the close.
• The placement will significantly increase Ventia (VNT AU)‘s float and make the stock a high probability inclusion to the S&P/ASX 200 (AS51 INDEX) at the June rebalance.
• We now expect two changes to the S&P/ASX 200 (AS51 INDEX) in June and the impact on the stocks is over 5.5 days of ADV to trade.

• A SELL note from a broker on Ecopro BM Co Ltd (247540 KS) was a key reason for the 7% and 8+% fall for Ecopro Co Ltd (086520 KS) .  
• Is this finally start of the end of the rally for the poster boy for Korean EV 
• When will earnings matter and what are the catalysts that could start the downfall?

• Nexus Select Trust (NST IN), a consumption centre REIT, is seeking to raise up to Rs32 billion (US$392 million). The offer opens from 9-11 May. 
• We previously discussed the IPO in Nexus Select Trust IPO: The Investment Case. NST is sponsored by Blackstone Group (BX US). 
• Our valuation analysis suggests that the IPO price range is attractive. Therefore, we would participate in this IPO. 

• Back on the 10th March, Thai Beverage (THBEV SP) launched a Delisting Offer for 79.66%-held Oishi Group (OISHI TB), at THB 59/share, a 26.9% premium to last close. 
• This two-step Offer required a shareholder vote followed by a tendering process. Yesterday (the 3rd May), Oishi shareholders approved the Delisting Offer. 
• The tendering period may kick off around this time next month, with an expected payment late August. 

• After the market close today, Kim Ik-Rae (Chairman of the Daou Kiwoom Group) announced his resignation of the Chairman position.
• Chairman Kim mentioned he has not done anything legally wrong. He will donate the entire amount (60.5 billion won) which was gained from selling 1.4 million shares of Daou Data. 
• We believe that Kiwoom Securities’ share price could fall additional 10-30% in the next several weeks/months. This could be offset by a large share buyback & cancellation by the company. 

• Friday marked the end of the review cutoff for the MSCI, CSI300, CSI500, STAR50, SSE50, ChiNext and a bunch of other indices for the upcoming rebalances in May and June.
• There are no major index events coming up this week as a lot of markets are shut on different days.
• There were big inflows to mainland China ETFs during the week, while there was a big redemption from the iShares MSCI ACWI ETF (ACWI US). 

• The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 31 July.
• Potential adds are Adaro Minerals (ADMR IJ), Bumi Resources Minerals (BRMS IJ), Panin Financial (PNLF IJ), Energi Mega Persada (ENRG IJ), Transcoal Pacific (TCPI IJ) and Pertamina Geothermal Energy (PGEO).
• Potential deletions are Japfa Comfeed Indonesia (JPFA IJ), Indocement Tunggal Prakarsa (INTP IJ), Timah Persero (TINS IJ), Bank Tabungan Negara Persero (BBTN IJ) and Chandra Asri Petrochemical (TPIA IJ). 

• Halfway through the review period, we see 5 potential changes for the Nifty Next 50 Index (NIFTYJR INDEX)/ Nifty 100 Index (NSE100 INDEX) at the September rebalance.
• All the potential adds are expected to migrate from MidCap to LargeCap at the AMFI June reclassification, while we expect two of the potential deletes to move the other way.
• Of the potential deletes, one is a high probability deletion from the MSCI India Index at the May QCIR while there is another that is a lower probability deletion.

• Aag Energy Holdings (2686 HK)’s latest AGM results show a strong dissent from minorities. The number of NO votes per resolution varied from 590.9-652.5 million or 17.40%-19.22% of outstanding shares.
• The AGM voting shows that Xinjiang Xintai Natural Gas (603393 CH) will struggle to pass the scheme even if the record date is changed and some NO votes are invalidated.
• The risk-reward profile remains unfavourable as the downside to a scheme fail (12.1% to 17.0% downside) is greater than the upside to a scheme pass (+12.1% to HK$1.85 offer).

• Two thirds of the way through the review period, we forecast two changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the June rebalance.
• Thai Life Insurance (TLI TB) and WHA Corp Pcl (WHA TB) could replace Jaymart PCL (JMART TB) and Ngern Tid Lor (TIDLOR TB).
• JMT Network Services (JMT TB) is a very close delete on market cap, while Intouch Holdings (INTUCH TB) is a close delete on liquidity. Multiple possibilities here.

• According to Chosun, KRX plans to list the single-stock futures of all constituents of KOSPI 200 and KOSDAQ 150 within 2-3 years.
• This information comes from a KRX official, who directly confirmed it. As Chosun is the most well-established news outlet in Korea, the credibility of this article is quite high.
• We should consider screening those with a high proportion of short-selling positions and devising a positioning strategy in conjunction with the new listing event of single stock futures in July.

• In unprecedented fashion, AAG Energy Holdings (2686 HK)‘s board adjourned the Court Meeting on the 27 April due to some voting instructions not being duly processed.
• That reasoning had a whiff of nonsense. And just under a week later, there has been no update. Perhaps this is moot though.
• At yesterday’s AGM, disinterested shareholders turned up in record numbers to vote against stock-standard resolutions. If a similar turnout were present at the Court Meeting, the Scheme would have failed. 

• According to the Stockholm International Peace Research Institute (SIPRI), total global military expenditure increased by 3.7% in real terms in 2022, to reach a new high of $2,240bn.
• A number of European states significantly increased their military spending following Russia’s invasion of Ukraine. Elsewhere, Japan’s 2022 military spending accounts for 1.1% of GDP, the highest level since 1960.
• South Korea had four companies inside the world’s top 100 arms manufacturers in 2021. These conglomerates are expected to move up the ranking in 2022. 

• We believe JD’s growth rate will continue to slow down and its margin will continue to improve in 1Q23.
• However, we also believe revenue growth will recover from 2Q23.
• We set a price target of HK$256, implying an upside of 85%. Buy.

• The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
• There are potential changes to some of the indices and then there are close changes that will result in big flows if they eventuate.
• The March rebalance saw some funky moves on the stocks that had big flows and we could see more of that at the September rebalance.