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Over the last few days, Shinko Electric Industries (6967 JP) shares have dipped lower than the previous standard trading range.
I expect this weakness is related to investors in other deals deciding to sell this deal too. I believe it is not related to Shinko specifically.
For that, while gap risk remains somewhat high, I still see break risk as low and see this as a great opportunity to buy the dip.

7&I (3382) Ito Family MBO – New Urgency for ACT

Days ago we got a dramatic headline about Ito family scion ITO Junro and his family company Ito Kogyo making a bid for Seven & I Holdings (3382 JP).
The stock popped, then fell. Details were not clear. Was the ¥9trln an EV number? A market cap? Was he serious? How would he get funding. Skepticism was rife.
Today we get more headlines from NHK. who says the family wants to raise ¥8trln to take 7&i private by end-Feb 2025.

TIP Taiwan Value High Dividend Index Rebalance: A Lot to Trade This Week

There are 15 changes for the TIP Taiwan Value High Dividend Index in November. The Yuanta Taiwan Value High Dividend ETF (00940 TT) has an AUM of US$5bn.
Estimated one-way turnover is 26% and there are 16 stocks with over 4 days of ADV left to trade. The rebalance commenced yesterday and will end on Friday.
An equal weighted basket of inclusions has outperformed an equal weighted basket of deletions since July. That could continue over the week as the ETF continues to rebalance their portfolio.

Seven & I Holdings (3382 JP): Evaluating the Potential MBO

Seven & I Holdings (3382 JP) did not dispute the NHK article’s claims that the founding family aims to raise buyout funds by the end of the fiscal year.
Since 13 November, there have been conflicting press reports on the MBO offer price. The NHK article’s implied offer price of JPY3,082 seems the most credible.
The MBO’s aggressive completion timeline pressures Alimentation Couche-Tard (ATD CN) to respond by either overbidding, working with the founding family at the back-end or walking away.

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

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 6 December.
With no increase in the number of index constituents this calendar year, there could be inclusions in December. The process of getting to 100 index constituents could drag into 2026.
Short interest is especially large in Sinotruk, Giant Biogene, Kuaishou Technology, ASMPT and JD Logistics and inclusion could set off some short covering.

I D & E Holdings (9161 JP) Gets a TOB Offer from Tokio Marine at +63% (¥6,500) – Probably Done

In 2023, Integrated Design & Engineering Holdings (9161 JP) was created as a technical listing, succeeding Nippon Koei (1954 JP). It has been listed for decades.
On Tuesday 19 November, Tokio Marine Holdings (8766 JP) announced an agreed/supported deal to buy out Integrated Design & Engineering Holdings (9161 JP). The register is open. Should be easy.
It’s a nice high price for a boring stock, but it is cheap. They are NOT overpaying, but I don’t see who would want to run interference on this.

Amcor Ltd/Berry Global: Packing Them In

Packing giants Amcor Limited (AMCR US/AMC AU) and Berry Global Group (BERY US) announced they will combine in an all-stock transaction, with a ~63%/37% ownership split (respectively) in the MergeCo.
Amcor will issue 7.25 Amcor shares for each Berry share, for a US$73.59/share implied price. US$650mn of benefits from identified cost, growth and financial synergies by end of third year.
Closing, subject to shareholder and reg approvals, is targeted in the middle of 2025. The transaction has been unanimously approved by the boards of both Amcor and Berry.

[JAPAN ACTIVISM] Exedy (7278) – Immediate Results Reaction Was a Damp Squib, But Climbing Now

I wrote last when Exedy was at ¥3,900 and had just announced, good earnings, a sharp div hike, and a huge buyback. The stock reacted well, but not THAT well.
Murakami-San had indeed lifted his stake, and the stock is now climbing again. Presumably, the company is in the market buying. At this price, it depends on what Murakami-san does.
Fat div. Lots of volume to buy in the next several months, but the big story is future measures.

Kadokawa (9468 JP): Take Profits as a Sony Privatisation Rumours Surface

Kadokawa Dwango (9468 JP) shares rose 16% after Reuters reported that Sony Corp (6758 JP) is in talks to acquire it. Kadokawa confirmed an initial letter of intent.
The privatisation interest is unsurprising as Kadokawa’s publishing arm, acclaimed intellectual properties, and positioning in the anime industry would be attractive to Sony.
The upside is limited as the last close reflects a significant takeover premium. There is a risk if a binding proposal emerges, it could be takeunder like Bain/T-Gaia.

Even in Japan, Significant Growth Potential for Seven Eleven and Other CVS

By Michael Causton

Seven Eleven’s future usually gets outlined as: Japan ex-growth and only growth is overseas. This is wrong. While the CVS sector is saturated, Seven Eleven itself has not reached saturation.
There are major areas of growth, both territorially and new offshoot businesses. Seven is already 32% more efficient than Lawson but more to come.
Here we take a deep dive into the state of CVS retailing in Japan and how Seven Eleven does, and will, fit into this – and how it will grow.

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Nov 20

Most Read: Wisdom Marine Lines, Synnex Technology International, S.F. Holding, Seven & I Holdings, HKBN Ltd, CAR Group , Kuaishou Technology, Keppel DC REIT and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – What If… A Modest Proposal
TIP Customized Taiwan Select High Div Index Rebalance Preview: 32% T/O; US$2.75bn Trade; HUGE Impact
TIP Taiwan Value High Dividend Index Rebalance: A Lot to Trade This Week
SF Holding (6936 HK): No Index Inclusion till Mid-2025; AH Premium Could Stay Wide
7&I (3382) Ito Family MBO – New Urgency for ACT
HKBN (1310 HK): China Mobile Comes Knocking. Again.
SF Holdings A/H Listing – Lower End Looks Digestable
S&P/ASX Index Rebalance Preview (Dec 2024): Dexus and Spark NZ with Double Deletions
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for December
KDC REIT Placement – Accretive Acquisitions Should Garner Strong Support

7&I (3382) – What If… A Modest Proposal

A lot of the talk around the news that Ito family scion Ito Junro had proposed to Seven & I Holdings (3382 JP) an MBO was about thwarting Alimentation Couche-Tard.
Several mentioned that this bid – seemingly uncompetitive at the moment – would make ACT back down. I discussed the bid and its repercussions here.
Here I suggest an alternate solution which might get everyone what they want.

TIP Customized Taiwan Select High Div Index Rebalance Preview: 32% T/O; US$2.75bn Trade; HUGE Impact

The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 284bn (US$8.7bn).
We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 15.8% and a round-trip trade of around US$2.75bn.
An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since beginning September with a pick-up in pace over the last 2-3 weeks.

TIP Taiwan Value High Dividend Index Rebalance: A Lot to Trade This Week

There are 15 changes for the TIP Taiwan Value High Dividend Index in November. The Yuanta Taiwan Value High Dividend ETF (00940 TT) has an AUM of US$5bn.
Estimated one-way turnover is 26% and there are 16 stocks with over 4 days of ADV left to trade. The rebalance commenced yesterday and will end on Friday.
An equal weighted basket of inclusions has outperformed an equal weighted basket of deletions since July. That could continue over the week as the ETF continues to rebalance their portfolio.

SF Holding (6936 HK): No Index Inclusion till Mid-2025; AH Premium Could Stay Wide

The S.F. Holding (002352 CH) H-shares are being offered at a price range of HK$32.3-36.3/share, a discount of 20.2%-29% to the A-shares. The max raise (including oversubscription) is US$912m.
Unlike Midea Group (300 HK), the S.F. Holding (002352 CH) H-shares will not get Fast Entry to any indices. Southbound Stock Connect inclusion will take place on 23 December.
With no index inclusion in the short-term, the H-shares discount to the A-shares should remain wide. The H-shares could become short sell eligible in February.

7&I (3382) Ito Family MBO – New Urgency for ACT

Days ago we got a dramatic headline about Ito family scion ITO Junro and his family company Ito Kogyo making a bid for Seven & I Holdings (3382 JP).
The stock popped, then fell. Details were not clear. Was the ¥9trln an EV number? A market cap? Was he serious? How would he get funding. Skepticism was rife.
Today we get more headlines from NHK. who says the family wants to raise ¥8trln to take 7&i private by end-Feb 2025.

HKBN (1310 HK): China Mobile Comes Knocking. Again.

HKBN Ltd (1310 HK), a Hong Kong broadband play, is never short on privatisation rumours. China Mobile (941 HK) is reportedly (again) holding talks with HKBN’s major shareholders.
China Mobile is a logical suitor. I highly doubt a non-PRC (government-affiliated) corporation would be permitted to take HKBN private.
Previous takeover rumours over the years came to nought. It may be different this time. HKBN was suspended this morning pursuant to the Takeovers Code.

SF Holdings A/H Listing – Lower End Looks Digestable

S.F. Holding (002352 CH), China’s largest express delivery company, is now looking to raise around US$800m in its H-share listing in Hong Kong.
SFH is the largest integrated express logistics service provider in China and the fourth largest in the world. It has been listed on the Shenzhen Stock Exchange since 2017.
We have covered the company and deal background in our previous notes. In this note, we talk about the IPO pricing.

S&P/ASX Index Rebalance Preview (Dec 2024): Dexus and Spark NZ with Double Deletions

With the review period nearly complete, there could be one change for the S&P/ASX 50 Index and one change for the S&P/ASX 200 (AS51 INDEX) in December.
Both deletes are also deletions from a global index next week and there could be short-term buying/covering opportunities on a drop in the stock price.
There has been a buildup of cumulative excess volume in all stocks over the last few months. There has been no increase in positioning in CAR Group (CAR AU) recently.

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

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 6 December.
With no increase in the number of index constituents this calendar year, there could be inclusions in December. The process of getting to 100 index constituents could drag into 2026.
Short interest is especially large in Sinotruk, Giant Biogene, Kuaishou Technology, ASMPT and JD Logistics and inclusion could set off some short covering.

KDC REIT Placement – Accretive Acquisitions Should Garner Strong Support

By Clarence Chu

Keppel DC REIT (KDCREIT SP) is looking to raise S$600m (US$450m) from a primary placement. The proceeds will be used to acquire interest in two data centers in Singapore.
The deal will be a large one to digest, accounting for 47 days of the stock’s three month ADV. That said, the acquisitions appear to be accretive to bottomline.
In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

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Nov 19

Most Read: Seven & I Holdings, Evergreen Marine Corp, Ping An Healthcare and Technology, Samsung Electronics, 99 Speed Mart Retail Holdings, WH Group, Synnex Technology International, Wisdom Marine Lines, Jb Financial Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – What If… A Modest Proposal
Quiddity Leaderboard TDIV Dec 24: Trade Successful; +9.5% in Three Weeks; More Upside Possible.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 6 Adds, 5 Deletes, Capping, US$3.5bn Trade
Ping An Healthcare and Technology (1833 HK) – Privatization Ahead?
My Take on the Three Scenarios that Sammy Buyback Stirred up in the Market Today
KLCI Index Rebalance Preview: One High Probability Change; One at the Cusp
WH Group (288 HK)’s US/Mexican Spin-Off
TIP Taiwan Value High Dividend Index Rebalance: A Lot to Trade This Week
TIP Customized Taiwan Select High Div Index Rebalance Preview: 32% T/O; US$2.75bn Trade; HUGE Impact
KRX Value-Up Special Rebalance in December: Playbook & Screening Rundown

7&I (3382) – What If… A Modest Proposal

A lot of the talk around the news that Ito family scion Ito Junro had proposed to Seven & I Holdings (3382 JP) an MBO was about thwarting Alimentation Couche-Tard.
Several mentioned that this bid – seemingly uncompetitive at the moment – would make ACT back down. I discussed the bid and its repercussions here.
Here I suggest an alternate solution which might get everyone what they want.

Quiddity Leaderboard TDIV Dec 24: Trade Successful; +9.5% in Three Weeks; More Upside Possible.

By Janaghan Jeyakumar, CFA

In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2024 index rebal event.
I currently see 5 ADDs and 4 DELs but some of these names are different from what we had last time (link).
The current estimate for one-way flow in December 2024 is US$1.54bn.

Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 6 Adds, 5 Deletes, Capping, US$3.5bn Trade

Using data from the close on 15 November, there could be 6 adds and 5 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December.
There will also be capping and funding flows that will lead to a one-way turnover of 16.9% and a one-way trade of TWD 57.5bn (US$1.77bn).
Short interest is at the highs in most forecast deletes, while the trend is mixed among the potential inclusions.

Ping An Healthcare and Technology (1833 HK) – Privatization Ahead?

By Xinyao (Criss) Wang

PAGD’s business model is problematic, leading to continuous shrinking revenue scale. As PAGD will entirely lose competitiveness in the future, the management wants to find a suitable way to “exit”.
Privatizing PAGD at low price and integrating it into the Ping An Group’s system is a good choice. In other words, Ping An hopes other shareholders to choose cash dividends.
Due to high tax, Hong Kong Stock Connect investors would prefer to sell in advance. Arbitrageurs can wait until stock price drops then make decisions based on new conversion price.

My Take on the Three Scenarios that Sammy Buyback Stirred up in the Market Today

The market’s reaction to Samsung Fire’s stake sale seems overhyped. Given past share sales, Life may outperform Fire as this momentum unfolds.
I don’t see SDS merging with Samsung Electronics. It lacks synergy and could stir up PR issues. If Sammy’s stock stalls, Lee Jae-yong might sell more of his SDS stake.
I’m still bullish on Sammy prefs. If the tax reform passes, a special dividend, not a buyback, will be the cleanest way for Samsung to address inheritance tax.

KLCI Index Rebalance Preview: One High Probability Change; One at the Cusp

There is a high probability of Gamuda Bhd (GAM MK) replacing Genting Malaysia (GENM MK) in the Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX) in December.
99 Speed Mart Retail Holdings (99SPD MK) is a close add and needs small outperformance over the next week to be added. That could see Genting Bhd (GENT MK) deleted.
Passive funds benchmarked to the Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX) will need to buy 0.3-0.75x ADV on the potential adds and sell 0.9-1.3x ADV on the potential deletes.

WH Group (288 HK)’s US/Mexican Spin-Off

Back on 14 July 2024, WH Group (288 HK) (WHG) announced it had submitted a plan to spin-off its Smithfield US and Mexican ops on the NYSE or NASDAQ
WHG the world’s largest pork producer, has now confirmed it will sell up to 20% of Smithfield’s shares on a fully diluted basis, in an initial public offering.
WHG has also proposed an assured entitlement for existing shareholders by way of a distribution in specie of existing shares of Smithfield, or a cash alternative.

TIP Taiwan Value High Dividend Index Rebalance: A Lot to Trade This Week

There are 15 changes for the TIP Taiwan Value High Dividend Index in November. The Yuanta Taiwan Value High Dividend ETF (00940 TT) has an AUM of US$5bn.
Estimated one-way turnover is 26% and there are 16 stocks with over 4 days of ADV left to trade. The rebalance commenced yesterday and will end on Friday.
An equal weighted basket of inclusions has outperformed an equal weighted basket of deletions since July. That could continue over the week as the ETF continues to rebalance their portfolio.

TIP Customized Taiwan Select High Div Index Rebalance Preview: 32% T/O; US$2.75bn Trade; HUGE Impact

The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 284bn (US$8.7bn).
We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 15.8% and a round-trip trade of around US$2.75bn.
An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since beginning September with a pick-up in pace over the last 2-3 weeks.

KRX Value-Up Special Rebalance in December: Playbook & Screening Rundown

Since Sep 24, 32 companies made Value-Up disclosures. After filtering, 17 remain, but KRX will keep inclusions tight. They’ll likely use PBR and ROE rankings for final selection.
We have 6 names—3 financials, 2 healthcare, 1 industrial. New Value-Up disclosures through Dec 6 could add more, but these 6 are the frontrunners for now.
KRX is likely to announce results by Dec 10-11. Start eyeing entry points 10 days prior, and if price action heats up early, consider pulling the trigger sooner.

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Nov 18

Most Read: Ping An Healthcare and Technology, Fuji Soft Inc, Samsung Electronics, Samsung Electronics Pref Shares, Evergreen Marine Corp, Seven & I Holdings, Yankuang Energy Group, S.F. Holding, Xingda International and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

2025 High Conviction: PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock
Fuji Soft (9749): KKR To Launch at ¥9,451, Fuji Soft REJECTS Bain’s Bid – Governance in Shambles
Samsung Electronics: A Massive 10 Trillion Won Share Buyback Program
Sammy’s Massive Buyback: Play the Pref Compression, Not Outright Long
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 6 Adds, 5 Deletes, Capping, US$3.5bn Trade
Fuji Soft (9749 JP): KKR Bumps to JPY9,451 as Bain Left High and Dry
7&I (3382) – What If… A Modest Proposal
FXI Rebalance Preview: One Change in December as Shorts Spike
SF Holding H Share Listing: AH Discount Views
Xingda (1899 HK): A Surprising Result as Offer Declared Unconditional

2025 High Conviction: PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock

Ping An Healthcare (1833 HK) (PA Gooddoctor), which was spun off from Ping An Insurance (601318 CH) and listed in May 2018, has announced a change in use of proceeds.
Part of that change includes the payment of a punchy HK$9.70/share special dividend.
The more interesting aspect is that a scrip dividend is also afforded, which should allow a stealth MBO from Ping An at zero premium.

Fuji Soft (9749): KKR To Launch at ¥9,451, Fuji Soft REJECTS Bain’s Bid – Governance in Shambles

On Friday 15 November, KKR announced it would launch KKR Tender2 to buy the rest of FujiSoft not purchased in KKR Tender1. Their new price is ¥1 higher than Bain’s.
Fuji Soft Inc (9749 JP) announced (J) it supported the KKR2 Tender and rejected the Bain TOB Proposal. KKR1 shareholders are “made whole” at ¥9,451/share. Minimum is 53.22%.
The document, however, is a Governance Disaster – an absolute shambles, effectively gaslighting investors at every turn. And now investors can see it was problematic from the start.

Samsung Electronics: A Massive 10 Trillion Won Share Buyback Program

Samsung Electronics (005930 KS) announced a massive share buyback program worth 10 trillion won which represents 3.1% of its market cap.
Of this total amount, about 3 trillion won will be purchased and cancelled in the next three months. This will include 50,144,628 common shares and 6,912,036 preferred shares.
We believe that this massive share buyback and cancellation is likely to boost Samsung Electronics’ share price resulting in a strong outperformance relative to KOSPI in the next 6-12 months.

Sammy’s Massive Buyback: Play the Pref Compression, Not Outright Long

The stock’s still below 1x PBR. But with Samsung’s tech gaps and slowdowns, going all-in on an outright long here off the back of this buyback feels way too early
The key is whether pref discounts tighten like 2015, but with a more balanced buyback this time and narrowing pref discounts, making a pref rally harder to predict short-term.
The goal’s the same as 2015—boosting the family’s control. If the remaining buyback leans pref-heavy, it could further tighten pref discounts, creating a potential opportunity to play the compression.

Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 6 Adds, 5 Deletes, Capping, US$3.5bn Trade

Using data from the close on 15 November, there could be 6 adds and 5 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December.
There will also be capping and funding flows that will lead to a one-way turnover of 16.9% and a one-way trade of TWD 57.5bn (US$1.77bn).
Short interest is at the highs in most forecast deletes, while the trend is mixed among the potential inclusions.

Fuji Soft (9749 JP): KKR Bumps to JPY9,451 as Bain Left High and Dry

KKR & Co (KKR US) has secured the Fuji Soft Inc (9749 JP) Board’s unanimous support by bumping its second tender offer to JPY9,451, a JPY1 premium to Bain’s JPY9,450 offer.
The Board is claiming a “fiduciary duty” win as it has secured a higher offer from KKR but paradoxically signalling that it will not negotiate a bump from Bain.
Bain will likely walk rather than try to win the Board’s support by revising terms. At the last close, the gross spread to KKR’s offer is 3.7%.

7&I (3382) – What If… A Modest Proposal

A lot of the talk around the news that Ito family scion Ito Junro had proposed to Seven & I Holdings (3382 JP) an MBO was about thwarting Alimentation Couche-Tard.
Several mentioned that this bid – seemingly uncompetitive at the moment – would make ACT back down. I discussed the bid and its repercussions here.
Here I suggest an alternate solution which might get everyone what they want.

FXI Rebalance Preview: One Change in December as Shorts Spike

With one trading day left in the review period, we expect one change with China Merchants Securities Co Ltd (H) (6099 HK) replacing Yankuang Energy Group (1171 HK) in December.
Capping will result in selling for Meituan (3690 HK) and buying in Tencent (700 HK) and Alibaba Group Holding (9988 HK).
Short interest has jumped on both stocks, but the increase is far higher in China Merchants Securities Co Ltd (H) (6099 HK) compared to Yankuang Energy Group (1171 HK).

SF Holding H Share Listing: AH Discount Views

S.F. Holding (002352 CH), the largest Asian integrated logistics service provider, is premarketing an H Share listing to raise US$1.0-1.5 billion, according to press reports.
In SF Holding H Share Listing: Updates Point to Improving Fundamentals, we noted that SF is in good health, with a return to growth, rising margins, and strong cash generation.
In this note, we examine the likely discount SF Holding will offer its H Shares compared to the A Shares.

Xingda (1899 HK): A Surprising Result as Offer Declared Unconditional

On its first closing date on 15 November, Xingda International (1899 HK) declared the Chairman’s offer unconditional as the offeror and concert parties represented 60.76% of outstanding shares.
The result was surprising. The IFA opined that the offer was not fair or reasonable, and the independent Board recommended that the shareholder not accept it.
The CCASS movements suggest that the offer was declared unconditional mainly because friends and family supported the Chairman’s offer. The gross/annualised spread is 1.6%/92.6%.

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Nov 17

Most Read: Kansai Electric Power, Zomato, Nexchip Semiconductor , SGX Rubber Future TSR20, S.F. Holding, Jiangxi Boya Bio Pharmaceutical, Seven & I Holdings, Yankuang Energy Group, Fuji Soft Inc, NAURA Technology Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
INDIA: Index Changes Due to the 45 New Additions to the F&O Segment
CES China Semiconductor Chips Index Rebalance Preview: Three Changes in December
Tire Industry: Premium Brands Exit Small-Rim Market Amidst Rising Competition
SF Holding Pre-IPO: Three Important Issues for Long-Term Investors to Consider
China Healthcare Weekly (Nov.17) – TCM VBP New Updates, CR Boya Completes Acquisition of Green Cross
Weekly Deals Digest (17 Nov) – Seven & I, Fuji Soft, Nishimoto, Macromill, CPMC, KEPCO, SF Holding
FXI Rebalance Preview: One Change in December as Shorts Spike
Fuji Soft (9749 JP): KKR Bumps to JPY9,451 as Bain Left High and Dry
China A50 ETFs Rebalance Preview: One Change to Close Out the Year

KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering

Kansai Electric Power (9503 JP) is looking to raise up to US$3.5bn via a primary offering and a sale of Treasury shares. Pricing date is between 26-29 November.
Kansai Electric Power (9503 JP) is among the better performing stocks from the Electric Utilities industry and trades at higher valuations compared to its peers.
There will be a fair bit of passive buying with around 29% of the offering being bought at the time of settlement of the shares.

INDIA: Index Changes Due to the 45 New Additions to the F&O Segment

The National Stock Exchange (NSEIN IN) has announced a list of 45 stocks that will be added to the Futures & Options (F&O) segment of the market from 29 November.
There will be changes to the NIFTY Index, NSE Nifty Next 50 Index, S&P BSE SENSEX Index and the CNXIT Index over the next couple of rebalances.
There are some interesting situations out there, including a change to the universe for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that could lead to more changes.

CES China Semiconductor Chips Index Rebalance Preview: Three Changes in December

There could be three changes for the CES China Semiconductor Chips Index at the close of trading on 13 December.
Based on the assets tracking the index, passive trackers will need to trade between 0.1-0.3x ADV in the stocks.
There will be selling in Semiconductor Manufacturing International Corporation (SMIC) (688981 CH) to cap the stock at 10% of the index weight.

Tire Industry: Premium Brands Exit Small-Rim Market Amidst Rising Competition

By Farah Miller

Premium brands focus on high-value large rims, leaving small-rim markets.
Factory closures signal overcapacity as brands exit small-rim tire production.
New players gain ground in small-rim segments in Europe and North America.

SF Holding Pre-IPO: Three Important Issues for Long-Term Investors to Consider

By Daniel Hellberg

SF Holding’s domestic parcel volumes have grown slower than overall market volumes recently; is this strategic, or simply a loss of share?
SF Holding is not closely aligned with any of the large online retail platforms in China; ultimately, is this independence an advantage or a disadvantage?
When will SF Holdings’ varied international operations — and there are a few of them — begin to pull their own weight, in terms of profitability and growth?

China Healthcare Weekly (Nov.17) – TCM VBP New Updates, CR Boya Completes Acquisition of Green Cross

By Xinyao (Criss) Wang

The new round of national TCM decoction pieces VBP has started. We think the overall price reduction would be relatively mild, and the impact on related TCM enterprises is limited.
The NHSA will vigorously promote the expansion of TCM VBP, which is another challenge for TCM injections. But the impact on exclusive TCM varieties and innovative TCM injections is smaller.
CR Boya has completed the acquisition of 100% equity of Green Cross and has included it in the scope of consolidated financial statements starting from November. Future M&As will continue.

Weekly Deals Digest (17 Nov) – Seven & I, Fuji Soft, Nishimoto, Macromill, CPMC, KEPCO, SF Holding

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: S.F. Holding (002352 CH) is premarketing an H Share listing to raise US$1.0-1.5 billion, Kansai Electric Power (9503 JP)‘s US$3.5 billion placement.
Event-Driven developments: Seven & I Holdings (3382 JP), Fuji Soft Inc (9749 JP), Nishimoto (9260 JP), Macromill, Inc (3978 JP), Agro Kanesho (4955 JP), Renewable Japan (9522 JP), CPMC.

FXI Rebalance Preview: One Change in December as Shorts Spike

With one trading day left in the review period, we expect one change with China Merchants Securities Co Ltd (H) (6099 HK) replacing Yankuang Energy Group (1171 HK) in December.
Capping will result in selling for Meituan (3690 HK) and buying in Tencent (700 HK) and Alibaba Group Holding (9988 HK).
Short interest has jumped on both stocks, but the increase is far higher in China Merchants Securities Co Ltd (H) (6099 HK) compared to Yankuang Energy Group (1171 HK).

Fuji Soft (9749 JP): KKR Bumps to JPY9,451 as Bain Left High and Dry

KKR & Co (KKR US) has secured the Fuji Soft Inc (9749 JP) Board’s unanimous support by bumping its second tender offer to JPY9,451, a JPY1 premium to Bain’s JPY9,450 offer.
The Board is claiming a “fiduciary duty” win as it has secured a higher offer from KKR but paradoxically signalling that it will not negotiate a bump from Bain.
Bain will likely walk rather than try to win the Board’s support by revising terms. At the last close, the gross spread to KKR’s offer is 3.7%.

China A50 ETFs Rebalance Preview: One Change to Close Out the Year

The December review will use closing prices from 18 November to determine the list of stocks that will be included into and excluded from the ETFs.
As of the close on 15 November, we see NAURA Technology Group (002371 CH) replacing Huaneng Lancang River Hydropow (600025 CH) in the ETFs.
NAURA Technology has doubled in price this year, while Huaneng Lancang has corrected from its highs and could be deleted from the ETF in just one quarter.

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Nov 16

Most Read: Seven & I Holdings, Kansai Electric Power, Malaysia Airports Holdings, Zomato, Nec Networks & System Integr, Macromill, Inc, Ping An Healthcare and Technology, SK Inc, SBI FinTech Solutions, Samsung Electronics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382 JP) – An ITO Family MBO? With Itochu? At ¥9trln? Maybe. Information Is Scarce
KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
Malaysia Airports (MAHB MK): Mavcom Approval. Sort Of
INDIA: Index Changes Due to the 45 New Additions to the F&O Segment
NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed
CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid
2025 High Conviction: PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock
Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates
SBI Fintech Solutions: Tender Offer and Delisting
Samsung Electronics: A Massive 10 Trillion Won Share Buyback Program

7&I (3382 JP) – An ITO Family MBO? With Itochu? At ¥9trln? Maybe. Information Is Scarce

Yesterday a news article from Bloomberg suggested 7&i was “considering” an MBO. Seven & I Holdings (3382 JP) later confirmed they had received a non-binding proposal from ITO Junro/family.
The initial number was ¥9trln. If market cap? High. If EV, too low. That would have implied a price just over the first “grossly inadequate” ACT price.
There is a lot we don’t know. This changes the landscape. It probably shifts the range trade, but it will shift more when we get more clarity on ITO-san’s price.

KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering

Kansai Electric Power (9503 JP) is looking to raise up to US$3.5bn via a primary offering and a sale of Treasury shares. Pricing date is between 26-29 November.
Kansai Electric Power (9503 JP) is among the better performing stocks from the Electric Utilities industry and trades at higher valuations compared to its peers.
There will be a fair bit of passive buying with around 29% of the offering being bought at the time of settlement of the shares.

Malaysia Airports (MAHB MK): Mavcom Approval. Sort Of

On the 30th October, Malaysian Aviation Commission (Mavcom) said Gateway Development Alliance (GDA)’s proposed privatisation of Malaysia Airports (MAHB MK) did not infringe on the Malaysian Aviation Commission Act 2015.
Mavcom followed that statement with it “welcomes any party to submit written feedback on the proposed decision by email .. by .. Nov 6”. So, it’s been approved or not?
In addition, there was conjecture earlier this year whether Mavcom, which will shortly be subsumed by the Civil Aviation Authority of Malaysia, had the clout to prevent the MAHB deal.

INDIA: Index Changes Due to the 45 New Additions to the F&O Segment

The National Stock Exchange (NSEIN IN) has announced a list of 45 stocks that will be added to the Futures & Options (F&O) segment of the market from 29 November.
There will be changes to the NIFTY Index, NSE Nifty Next 50 Index, S&P BSE SENSEX Index and the CNXIT Index over the next couple of rebalances.
There are some interesting situations out there, including a change to the universe for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that could lead to more changes.

NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed

On 29-October, NEC Corp (6701 JP) announced a low-ball TOB to buy out subsidiary Nec Networks & System Integr (1973 JP). It deserved activism, but finding an activist was tough.
On 7 November, it got an activist, and I wrote on 8-November the Landscape Had Changed that they might have bought 6mm shares more in 5 days. They bought 8.4mm.
The Landscape Has FULLY Changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable. But Target Advisor DCF was ¥3,073-4,688 without synergies.

CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid

Today, CVC announced a deal to buy out Macromill, Inc (3978 JP). It is agreed and supported by management and the Board.
The shareholder register on this stock is wide open. It is not burdened by crossholders. It IS burdened by 7 large active holders who have 55%.
Those holders may complain about the process, the transparency, and the low price. This could be a target for an activist or a strategic overbidder.

2025 High Conviction: PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock

Ping An Healthcare (1833 HK) (PA Gooddoctor), which was spun off from Ping An Insurance (601318 CH) and listed in May 2018, has announced a change in use of proceeds.
Part of that change includes the payment of a punchy HK$9.70/share special dividend.
The more interesting aspect is that a scrip dividend is also afforded, which should allow a stealth MBO from Ping An at zero premium.

Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates

A Democratic Party insider noted some proposals need legal tweaks, so the December 10 deadline may slip, but they’re set on passing the expanded director loyalty duty.
FKI analyzed top conglomerates’ shareholder structures and found four of the top 10 facing substantial risks.
We need more clarity before jumping in, but with MBK driving Korea’s hostile M&A scene and the Commercial Act amendments, local chaebols facing control battles are a key KOSPI theme.

SBI Fintech Solutions: Tender Offer and Delisting

After the market close on 14 November, SBI Fintech Solutions announced that the Japanese financial group SBI is pushing for a tender offer and delisting of SBI Fintech Solutions.
The tender offer price is 5,000 won per share, which is 36% higher than the closing price on 14 November. The tender offer size amount is about 26 billion won.
Given the relatively solid upside, we believe SBI Holdings is likely to successfully complete this tender offer and take the company private.

Samsung Electronics: A Massive 10 Trillion Won Share Buyback Program

Samsung Electronics (005930 KS) announced a massive share buyback program worth 10 trillion won which represents 3.1% of its market cap.
Of this total amount, about 3 trillion won will be purchased and cancelled in the next three months. This will include 50,144,628 common shares and 6,912,036 preferred shares.
We believe that this massive share buyback and cancellation is likely to boost Samsung Electronics’ share price resulting in a strong outperformance relative to KOSPI in the next 6-12 months.

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Nov 15

Most Read: Seven & I Holdings, Kansai Electric Power, Zomato, Nec Networks & System Integr, Hyundai Engineering & Construction, Macromill, Inc, China Boqi Environmental Hol, SK Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382 JP) – An ITO Family MBO? With Itochu? At ¥9trln? Maybe. Information Is Scarce
KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
Kansai Electric (9503 JP) – HUGE Equity Offering To Stuff Retail
INDIA: Index Changes Due to the 45 New Additions to the F&O Segment
NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed
Trump Trade: Korean Construction Vs Military Stocks Amid Potential End of War in Ukraine?
CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid
Boqi Env (2377 HK)’s Partial Offer
Macromill (3978 JP): CVC’s Light Tender Offer at JPY1,150 Begs for Activism
Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates

7&I (3382 JP) – An ITO Family MBO? With Itochu? At ¥9trln? Maybe. Information Is Scarce

Yesterday a news article from Bloomberg suggested 7&i was “considering” an MBO. Seven & I Holdings (3382 JP) later confirmed they had received a non-binding proposal from ITO Junro/family.
The initial number was ¥9trln. If market cap? High. If EV, too low. That would have implied a price just over the first “grossly inadequate” ACT price.
There is a lot we don’t know. This changes the landscape. It probably shifts the range trade, but it will shift more when we get more clarity on ITO-san’s price.

KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering

Kansai Electric Power (9503 JP) is looking to raise up to US$3.5bn via a primary offering and a sale of Treasury shares. Pricing date is between 26-29 November.
Kansai Electric Power (9503 JP) is among the better performing stocks from the Electric Utilities industry and trades at higher valuations compared to its peers.
There will be a fair bit of passive buying with around 29% of the offering being bought at the time of settlement of the shares.

Kansai Electric (9503 JP) – HUGE Equity Offering To Stuff Retail

The past few years, large equity offerings have either been IPOs or secondary offerings (without dilution). Today we get a big dilutive secondary offering from Kansai Electric Power (9503 JP).
This is ~223mm shares or roughly ¥530bn against a current market cap of ¥2.1+trln. A 25% increase in share count. It is quite dilutive, but the stock is not rich.
Because dilutive, not overly-well-flagged, and mostly retail, this could get hammered. The div is not high enough to make it attractive, so one has to appreciate high earnings yield.

INDIA: Index Changes Due to the 45 New Additions to the F&O Segment

The National Stock Exchange (NSEIN IN) has announced a list of 45 stocks that will be added to the Futures & Options (F&O) segment of the market from 29 November.
There will be changes to the NIFTY Index, NSE Nifty Next 50 Index, S&P BSE SENSEX Index and the CNXIT Index over the next couple of rebalances.
There are some interesting situations out there, including a change to the universe for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that could lead to more changes.

NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed

On 29-October, NEC Corp (6701 JP) announced a low-ball TOB to buy out subsidiary Nec Networks & System Integr (1973 JP). It deserved activism, but finding an activist was tough.
On 7 November, it got an activist, and I wrote on 8-November the Landscape Had Changed that they might have bought 6mm shares more in 5 days. They bought 8.4mm.
The Landscape Has FULLY Changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable. But Target Advisor DCF was ¥3,073-4,688 without synergies.

Trump Trade: Korean Construction Vs Military Stocks Amid Potential End of War in Ukraine?

Although it is UNCERTAIN when the wars in Ukraine and the Middle East will end, if these wars indeed come to an end, this could POSITIVELY IMPACT Korean construction sector.
The end of the wars in Ukraine and the Middle East is likely to NEGATIVELY IMPACT the Korean military/defense sector.
The major Korean construction companies have low valuation multiples. On the other hand, the major Korean military/defense companies have high valuation multiples.

CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid

Today, CVC announced a deal to buy out Macromill, Inc (3978 JP). It is agreed and supported by management and the Board.
The shareholder register on this stock is wide open. It is not burdened by crossholders. It IS burdened by 7 large active holders who have 55%.
Those holders may complain about the process, the transparency, and the low price. This could be a target for an activist or a strategic overbidder.

Boqi Env (2377 HK)’s Partial Offer

Back on the 23rd October, flue gas treatment play China Boqi Environmental Hol (2377 HK) announced a buyback of 15% of shares out, at HK$1.20/share, a 16.5% premium to undisturbed.
The upshot of the buyback lifts the stake of co-founder Zeng Zhijun and concert parties to 32.59% – up from 27.71% – before options. A whitewash waiver is required.
A expected, the Offer Doc has now been delayed. It is now expected to be dispatched on or before the 29th November.

Macromill (3978 JP): CVC’s Light Tender Offer at JPY1,150 Begs for Activism

Macromill, Inc (3978 JP) has recommended CVC’s tender offer at JPY1,150, a 40.1% premium to the last close.
While the offer is attractive compared to historical trading ranges, it is 41% below the IPO price and 11% below the midpoint IFA DCF valuation range.
The lack of an irrevocable, open shareholder register and large foreign institutions’ shareholding increases the odds of activism to force a bump.

Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates

A Democratic Party insider noted some proposals need legal tweaks, so the December 10 deadline may slip, but they’re set on passing the expanded director loyalty duty.
FKI analyzed top conglomerates’ shareholder structures and found four of the top 10 facing substantial risks.
We need more clarity before jumping in, but with MBK driving Korea’s hostile M&A scene and the Commercial Act amendments, local chaebols facing control battles are a key KOSPI theme.

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Nov 14

Most Read: Seven & I Holdings, Fast Retailing, Kansai Electric Power, Samsung Electronics, Hanwha Systems Co Ltd, S.F. Holding, SGX Rubber Future TSR20 and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Seven & I Holdings (3382 JP): The Rumoured MBO Price Underscores the Trapped Value
Nikkei 225 Index Rebalance Preview (Mar 2025): Ranking, Capping, Funding & Other Changes
Kansai Electric (9503 JP) – HUGE Equity Offering To Stuff Retail
Kansai Electric Placement – A US$3.5bn Raising Which Doesn’t Appear Well Flagged
KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
Situation Flagged: Sammy Stock Hits Level that Squeezes Family’s Loan Collateral Floor
KOSPI Size Indices: Global Index Selling Leads to Potential Downward Migration
SF Holdings A/H Listing – Thoughts on A/H Premium and past A/H Listings
Weather Favorable For Rubber In Thailand But Can Trouble Indonesia, Vietnam
Kansai Electric Power (9503 JP): A US$3.5 Billion Primary/Secondary Offering

Seven & I Holdings (3382 JP): The Rumoured MBO Price Underscores the Trapped Value

In response to media reports, Seven & I Holdings (3382 JP) confirmed receiving a non-binding proposal from Junro Ito (founder’s son) and Ito-Kogyo. No terms were disclosed.
Bloomberg suggests an MBO deal worth up to JPY9 trillion (US$58 billion), which implies an offer of JPY3,467.89, a 39.3% premium to the last close price.
The “white knight” MBO undermines Alimentation Couche-Tard (ATD CN)’s offer and is a proxy for the restructuring plan’s value. Couche-Tard will likely walk if a binding MBO proposal emerges.

Nikkei 225 Index Rebalance Preview (Mar 2025): Ranking, Capping, Funding & Other Changes

The review period for the Nikkei 225 Index March rebalance ends in January. There could be one outright change and one or two others driven by sector balance.
Depending on the changes, passive trackers will need to buy between 8.2-20.5x ADV (8.75%-24.5% of real float) and sell between 9-38x ADV on the deletions.
Fast Retailing‘s PAF could see a double reduction to keep the stock weight capped at 10%. There will be huge passive selling leading to funding inflows for other index constituents.

Kansai Electric (9503 JP) – HUGE Equity Offering To Stuff Retail

The past few years, large equity offerings have either been IPOs or secondary offerings (without dilution). Today we get a big dilutive secondary offering from Kansai Electric Power (9503 JP).
This is ~223mm shares or roughly ¥530bn against a current market cap of ¥2.1+trln. A 25% increase in share count. It is quite dilutive, but the stock is not rich.
Because dilutive, not overly-well-flagged, and mostly retail, this could get hammered. The div is not high enough to make it attractive, so one has to appreciate high earnings yield.

Kansai Electric Placement – A US$3.5bn Raising Which Doesn’t Appear Well Flagged

Kansai Electric Power (9503 JP) plans to raise up to US$3.5bn (including over-allocation) to partly fund its investment plans.
This will be a large deal for the stock to digest and doesn’t appear to have been particularly well flagged.
In this note, we will talk about the placement and run the deal through our ECM framework.

KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering

Kansai Electric Power (9503 JP) is looking to raise up to US$3.5bn via a primary offering and a sale of Treasury shares. Pricing date is between 26-29 November.
Kansai Electric Power (9503 JP) is among the better performing stocks from the Electric Utilities industry and trades at higher valuations compared to its peers.
There will be a fair bit of passive buying with around 29% of the offering being bought at the time of settlement of the shares.

Situation Flagged: Sammy Stock Hits Level that Squeezes Family’s Loan Collateral Floor

Most loans with collateral floors are at or below thresholds, and all three court deposits are near or under a 30% drop from their initial valuation.
No solid intel on share sales yet, and it’s unlikely they’ll sell Samsung Electronics after a 30% dip. They may focus on their stakes in Samsung Life or Samsung SDS.
There’s talk Samsung might boost prices to help the family avoid the collateral floor issue, but with DRAM demand down, a major shareholder return seems unlikely for now.

KOSPI Size Indices: Global Index Selling Leads to Potential Downward Migration

The review period for the March rebalance of the KOSPI Size Indices commences on 1 December and will end on 28 February.
We see 5 migrations from MidCap to LargeCap, 1 new addition to LargeCap, 8 stocks moving from SmallCap to MidCap and 1 new addition to MidCap.
The migrations from MidCap to LargeCap have outperformed the other migration categories. Four potential LargeCap to MidCap migrations will be deleted from a global index later this month.

SF Holdings A/H Listing – Thoughts on A/H Premium and past A/H Listings

S.F. Holding (002352 CH) (SFH), China’s largest express delivery company, is now said to be looking to raise around US$1-1.5bn in its H-share listing in Hong Kong.
SFH is the largest integrated express logistics service provider in China and the fourth largest in the world. It has been listed on the Shenzhen Stock Exchange since 2017.
We have covered the company and deal background in our previous notes. In this note, we talk about the past A/H listing and possible premium.

Weather Favorable For Rubber In Thailand But Can Trouble Indonesia, Vietnam

By Vinod Nedumudy

Thailand likely to receive less rains in the coming one-month period
Indonesia, Vietnam, Cambodia likely to have above normal rains
WMO predicts 60% chances of La Nina developing

Kansai Electric Power (9503 JP): A US$3.5 Billion Primary/Secondary Offering

Kansai Electric Power (9503 JP) has announced primary and secondary offerings of up to 223.1 million shares (including overallotment) and a third-party allotment of 29.1 million shares.
JPY239.9 billion of proceeds will be used to improve energy efficiency and decarbonisation, while other funds will be used for data centres, renewable energy and overseas investments.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 26 and 29 November (likely 26 November).

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Oct 24

Most Read: Shin Kong Financial Holding, Seven & I Holdings, Tokyo Metro, Dexus Property, Samsung Electronics, Voltas Ltd, Korea Zinc, Pony AI and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Shin Kong and Taishin – There’s a Good Value Swap Trade To Do Here
The TOPIX October FFW Trade – BIG Numbers
The Tokyo Metro (9023 JP) IPO And Aftermarket – What To Look For
Tokyo Metro (9023 JP): Listing Tomorrow; Div Yield and Index Flows Should Take It Higher
Australia: Potential Passive Selling in November Will Be Big
Surging Buzz Around the Potential Split of Samsung Electronics
NIFTY200 Momentum30 Index Rebalance Preview: 56% Turnover, Big Trade & Strong Momentum
Korea Zinc: Remaining Free Float Post Tender and a Margin Call for Choi on Young Poong Precision?
Tokyo Metro (9023 JP): One Miss; A Bigger Index Inclusion Coming?
Pony AI Pre-IPO – The Positives – Scaling up Robotaxi & Robotrucks

Shin Kong and Taishin – There’s a Good Value Swap Trade To Do Here

Media reports indicate that the shareholder base of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) have approved their merger.
Shin Kong meeting results were public just before the market closed. The results from Taishin were known earlier. The market and spread were un-moved. If anything, things widened a little.
Next, the two companies try to get fair Trade Commission, FSC, and Exchange approval to join to become Taishin Shin Kong FHC. And there’s a good trade to do here.

The TOPIX October FFW Trade – BIG Numbers

Post-Close on the 5th business day of October every year, the TSE announces the Free Float Weight review for all stocks where the FY ends in the Jan-March quarter.
Yesterday saw 210 decent changes to FFW (more up than down). There are still 400+ Phased Weight Reductions, 3 new adds (3663, 3993, 9341), and some share cancellation-based share-count reductions.
It turns out there is a LOT to trade. I see ¥2trln one-way (¥2trln net to buy on 245 names, and ¥2trln to sell on the other nearly 1,900 names).

The Tokyo Metro (9023 JP) IPO And Aftermarket – What To Look For

The Tokyo Metro (9023 JP) IPO is one of the largest IPOs of recent years, well-flagged, and it is hot hot hot! A super stable, well-known, well-respected, service provider.
There are numerous attractions but I expect people have not thought too deeply about the demand and supply dynamics of different holder types. It’s worth thinking about.
This was priced “cheap” but everyone knows that so there may be flippers. This is probably more Japan Post Bank than Japan Post Insurance.

Tokyo Metro (9023 JP): Listing Tomorrow; Div Yield and Index Flows Should Take It Higher

Tokyo Metro (9023 JP) priced its IPO at the top end (JPY 1200/share), raised JPY 348.6bn (US$2.3bn) and the company is valued at JPY 697bn (US$4.62bn).
The stock starts to trade today, and the grey market is indicating an open 20% higher. Not surprising considering that the IPO was heavily oversubscribed.
Even at a price of JPY 1440/share, the estimated dividend yield is 2.78% and that should keep the stock supported. Index inclusions will result in more buying next week.

Australia: Potential Passive Selling in November Will Be Big

There could be two or three Aussie names that are deleted from global passive portfolios in November. In each of the cases, there is a lot to sell from passives.
One name is very high probability while the deletion of the others depends on the day of the week chosen.
Shorts have been built up on the stocks and there are strong indications of positioning. But the extent of the positioning varies, and the stocks could have differently.

Surging Buzz Around the Potential Split of Samsung Electronics

We’re starting to see some local market players getting ready and setting up trades that bet on a potential split for Samsung Electronics.
Samsung could leverage the buzz around spinning off its foundry business to split key units—foundry, memory chips, and others—into two or three separate companies at the shareholder meeting.
Additionally, the valuation gap between Samsung Electronics and Biologics has narrowed more than it has in the last decade, making it an even more attractive opportunity.

NIFTY200 Momentum30 Index Rebalance Preview: 56% Turnover, Big Trade & Strong Momentum

There could be 16 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 30 December.
If all changes are on expected lines, one-way turnover is estimated at 55.6% and that will result in a one-way trade of INR 62bn (US$736m).
Since June, the potential adds to the index have outperformed the index and the potential deletes by a big margin. Momentum could keep the outperformance going till implementation date.

Korea Zinc: Remaining Free Float Post Tender and a Margin Call for Choi on Young Poong Precision?

According to Korea Zinc, it plans to disclose the treasury shares tender offer results on 28 October.
We discuss the remaining free float after the tender offer and the probabilities of share price decline or even a share price squeeze post announcement of the tender offer results.
All in all, this M&A fight for Korea Zinc remains tight with a slight advantage to MBK/Young Poong alliance.

Tokyo Metro (9023 JP): One Miss; A Bigger Index Inclusion Coming?

Tokyo Metro (9023 JP) had a blockbuster listing yesterday, finishing the day 45% higher. That took the estimated div yield down from 3.33% (at the IPO price) to 2.3%.
One expected index inclusion will not take place due to insufficient information on IPO allocations and that leads to a much lower free float than expected.
That inclusion will now be deferred to June; BUT there could be two other (bigger) index inclusions on the cards prior to that.

Pony AI Pre-IPO – The Positives – Scaling up Robotaxi & Robotrucks

Pony AI (PONY US) an autonomous mobility solutions provider, is looking to raise up to US$300m in its US IPO.
As per Frost & Sullivan, Pony AI was among the first companies in China to obtain licenses to operate fully driverless robotaxis in all four Tier-1 cities in China.
In this note, we talk about the positive aspects of the deal.

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Oct 23

Most Read: Fuji Soft Inc, Hyundai Motor India , Tokyo Metro, International Games System, Dexus Property, Shinko Electric Industries, China Resources Beverage and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Fuji Soft (9749 JP) – The Fine Print Is Worth Reading
Shinko Electric (6967 JP) Takeover – THIS Is a Dip to Buy
Hyundai Motor India IPO: How Far to Fast Entry?
Tokyo Metro (9023 JP): Listing Tomorrow; Div Yield and Index Flows Should Take It Higher
Tokyo Metro IPO Trading – Robust Demand for Quality Asset
The Tokyo Metro (9023 JP) IPO And Aftermarket – What To Look For
International Games System (3293 TT): Positioning & Potential Passive Buying
Australia: Potential Passive Selling in November Will Be Big
Shinko Electric (6967 JP): A Casualty of the China TCM Deal Break
China Resources Beverage IPO Trading – Still a Bit of Fizz Left

Fuji Soft (9749 JP) – The Fine Print Is Worth Reading

On 11-Oct, Bain submitted a binding proposal for Fuji Soft Inc (9749 JP). On 15-Oct, FSI acknowledged, but questioned the Nozawa family commitment. Founder Nozawa wrote letters the 17th.
O 18-Oct, FSI reiterated support for the KKR First Tender in a late night drop. It included fine print, but no media coverage. Today, FSI filed a Target Opinion Amendment.
That filing included yet more fine print not in the public filing Friday. And KKR extended. The new fine print is nuanced. But worth reading.

Shinko Electric (6967 JP) Takeover – THIS Is a Dip to Buy

Over the last few days, Shinko Electric Industries (6967 JP) shares have dipped lower than the previous standard trading range.
I expect this weakness is related to investors in other deals deciding to sell this deal too. I believe it is not related to Shinko specifically.
For that, while gap risk remains somewhat high, I still see break risk as low and see this as a great opportunity to buy the dip.

Hyundai Motor India IPO: How Far to Fast Entry?

Hyundai Motor (005380 KS) raised INR 279bn (US$3.3bn) by selling some of its stake in Hyundai Motor India (1342Z IN), valuing Hyundai India at INR 1,593bn (US$18.95bn).
The anchor investor book was fully subscribed. The non-institutional and retail books were undersubscribed, so institutions got more stock. And that changes the free float estimates for one global index.
Even with the higher float, Hyundai Motor India (1342Z IN) is unlikely to get Fast Entry to one global index later this month. Index inclusions should commence in February 2025.

Tokyo Metro (9023 JP): Listing Tomorrow; Div Yield and Index Flows Should Take It Higher

Tokyo Metro (9023 JP) priced its IPO at the top end (JPY 1200/share), raised JPY 348.6bn (US$2.3bn) and the company is valued at JPY 697bn (US$4.62bn).
The stock starts to trade today, and the grey market is indicating an open 20% higher. Not surprising considering that the IPO was heavily oversubscribed.
Even at a price of JPY 1440/share, the estimated dividend yield is 2.78% and that should keep the stock supported. Index inclusions will result in more buying next week.

Tokyo Metro IPO Trading – Robust Demand for Quality Asset

Tokyo Metro (9023 JP)‘s shareholders raised around US$2.4bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.

The Tokyo Metro (9023 JP) IPO And Aftermarket – What To Look For

The Tokyo Metro (9023 JP) IPO is one of the largest IPOs of recent years, well-flagged, and it is hot hot hot! A super stable, well-known, well-respected, service provider.
There are numerous attractions but I expect people have not thought too deeply about the demand and supply dynamics of different holder types. It’s worth thinking about.
This was priced “cheap” but everyone knows that so there may be flippers. This is probably more Japan Post Bank than Japan Post Insurance.

International Games System (3293 TT): Positioning & Potential Passive Buying

International Games System (3293 TT) could be added to a global index at the end of November and there will be a lot of buying in the stock.
The big rally in the stock has led to International Games System (3293 TT) trading expensive to its regional peers.
There has been an increase in cumulative excess volume over the last month. But there could still be more to go over the next week.

Australia: Potential Passive Selling in November Will Be Big

There could be two or three Aussie names that are deleted from global passive portfolios in November. In each of the cases, there is a lot to sell from passives.
One name is very high probability while the deletion of the others depends on the day of the week chosen.
Shorts have been built up on the stocks and there are strong indications of positioning. But the extent of the positioning varies, and the stocks could have differently.

Shinko Electric (6967 JP): A Casualty of the China TCM Deal Break

At first glance, the Shinko Electric Industries (6967 JP) and China TCM merger arb has little or no similarities regarding the region, precondition, sector, type of offeror, or offer structure.
The aftermath of China Traditional Chinese Medicine (570 HK) has resulted in funds resizing well-held merger arb positions, mainly long-dated names with tail event risks. This has increased the Shinko spread.
Shinko’s tail event risk (no SAMR approval) remains low. Timing remains the primary risk, as a delay is possible. At the last close, the gross/annualised spread was 8.9%/29.2%.

China Resources Beverage IPO Trading – Still a Bit of Fizz Left