Daily Briefs

Korea Zinc’s delisting daily trading volume cutoff is 20K, about 0.12% of the total. We might see volumes plummet, making it tough to maintain even that 20K level.
Keep an eye on trading opportunities; we have some time with delisting risks, but low trading volume could lead to being booted from the KOSPI 200 and Global Index.
This sell-off could spike short-term volatility and create great entry points for trading, especially after the court approved the buyback tender, denying MBK’s injunction.

Doosan’s Tweaked Restructuring Play: My Take on Hitting Robotics’ 13% Spread

The big question is how to cash in on the dissenters’ rights spread for Robotics. The main concern is cancellation risk, but the FSS doesn’t seem too negative on approval.
To sustain nuclear momentum, Enerbility needs heavy borrowing for facility investments, requiring a lower debt ratio. Offloading debt-heavy Bobcat is a move shareholders might support.
With NPS unlikely to ignore the government’s nuclear push, Robotics’ spread could narrow quickly. Despite cancellation risk and no hedge, the remaining juice makes an outright position worth considering.

Hyundai Motor India IPO Trading – Set for a Tricky Start

By Sumeet Singh

Hyundai Motor (005387 KS) raised around US$3.3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
In our previous notes, we looked at the company’s past performance and valuations. In this note, we will talk about the trading dynamics.

Hyundai Motor India IPO: Little Downside. Low Retail Interest-Myopia, Misguidance, Misinterpretation

By Devi Subhakesan

Hyundai Motor India is expected to close flat or slightly positive today, as low retail participation and modest expectations for gains on listing day could limit selling pressure.
Many retail investors skipped the IPO, influenced by ‘finfluencers’ who had largely advised against it based on misinterpreted valuation comparison with Maruti Suzuki India (MSIL IN) .
Hyundai Motor India’s meaningful discount to Maruti Suzuki on operating profit based valuation multiples suggest room for outperformance in the medium term.

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.

Korea Zinc: Court Dismisses the Second Injunction Filed by MBK

By Douglas Kim

The Seoul Central District Court dismissed the second injunction filed by MBK Partners and Young Poong to suspend the share buyback/tender offer by Korea Zinc Chairman Choi and his allies.
As a result of the court dismissing the second injunction filed by MBK, the M&A fight for Korea Zinc is likely to continue until the AGM in March 2025.
Depending upon Korea Zinc’s tender offer subscription, there is a possibility of MBK buying more shares directly from the market if the subscription falls below the proposed amounts.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 22

Daily Brief Singapore: Delfi Ltd, SGX Rubber Future TSR20, Keppel DC REIT, Singapore Airlines and more

By Smartkarma Daily Briefs | Daily Briefs, Singapore

In today’s briefing:

Delfi Ltd (DELFI SP) – Sweeter Times Ahead?
Helixtap China Report: Declining Inventory Point At Improved Demand; Sustainability Questionable
REIT Watch – S-REITs announce their schedule for upcoming earnings season
Nokian Gifts Romania World’s First Zero CO2 Emission Tire Factory
CNMC, Travelite, Noel Gifts and LMS Compliance directors raise stakes

Delfi Ltd (DELFI SP) – Sweeter Times Ahead?

By Angus Mackintosh

Delfi Ltd (DELFI SP) saw some impact from the weaker IDR and higher cocoa prices in 1H2024 but prospects for 2H2024 look more promising with less expected disruption.
The company continues to roll out new distribution across modern trade independent and general trade as well as new variants for existing best-selling brands such as Silver Queen chocolate.
The company remains confident that the cocoa price will decline from current levels although it may remain higher than historic levels. Valuations remain attractive.

Helixtap China Report: Declining Inventory Point At Improved Demand; Sustainability Questionable

By Arusha Das

Inventory lowest since February 2024
Arbitrage widens for African and Indonesian rubber
Expansion in imports & exports in August

REIT Watch – S-REITs announce their schedule for upcoming earnings season

By Geoff Howie

Schedule of S-REITs & Property Trusts Earnings or Business Updates ParkwayLife REIT 16-Oct After Market Business Update 18-Oct Before Market Business Update CapitaLand Integrated Commercial Trust 5-Nov Before Market Business Update 5-Nov Before Market Business Update 5-Nov Before Market Financial Results.

Nokian Gifts Romania World’s First Zero CO2 Emission Tire Factory

By Vinod Nedumudy

EUR 650 mn Oradea plant to start commercial production in 2025
EUR 250 million for plant comes in EC-approved state aid and EIB loan
Nokian sets up new production line for heavy tire inner tubes at Nokia

CNMC, Travelite, Noel Gifts and LMS Compliance directors raise stakes

By Geoff Howie

Institutions were net sellers of Singapore stocks over the five trading sessions spanning Oct 11 to Oct 17, with S$144 million of net institutional outflow, partially reversing the preceding 10 sessions of S$251 million net inflow.
This has brought net institutional flow in the 2024 year to Oct 17, back to a net outflow of S$21 million.
Leading the net institutional outflow over the five sessions through to Oct 17 were United Overseas Bank, Singapore Telecommunications, Singapore Airlines, Capitaland Ascendas REIT, Keppel, Capitaland Integrated Commercial Trust, Genting Singapore, Seatrium, Mapletree Pan Asia Commercial Trust and Jardine Matheson Holdings.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 22

Daily Brief India: Hyundai Motor India , Waaree Energies, Bajaj Auto Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

Hyundai Motor India: Trading Strategy on the First Day of Trading
Waaree Energies IPO Update- Forensic Analysis
Namaste India 🙏 | Earnings Editions Are Back

Hyundai Motor India: Trading Strategy on the First Day of Trading

By Douglas Kim

Hyundai Motor India (1342Z IN) shares start trading on 22 October. The IPO price is 1,960 INR.
Although there has been some solid interest on this IPO among many institutional investors, there have been a lower interest among retail investors.
There has also been relatively low grey market premium. If the share price reaches in the positive upper single digits, we expect many traders to sell into this short-term rally.

Waaree Energies IPO Update- Forensic Analysis

By Nitin Mangal

Waaree Energies (0656504D IN) awaited IPO is about to open on October 21. The IPO comprises of fresh issue worth INR 36 bn and OFS worth INR 7.2 bn.
This insight is an update to the previous note on the company Waaree Energies IPO- Forensic Analysis , on the forensics front.
The company still faces some of the forensic setbacks we found in the DRHP. These include capital purchases from related parties, heated receivables, bizarre lease accounting, unpaid dues, etc.

Namaste India 🙏 | Earnings Editions Are Back

By Pranav Bhavsar

Over the next couple of weeks, we will focus on highlighting key earnings and what catches our attention in the conference calls
Top Large Cap Bullish Ideas include HDFC Asset Management Co Ltd (HDFCAMC IN), Bajaj Auto Ltd (BJAUT IN) & Pvr Inox (PVRINOX IN).
D.B. Corp Ltd (DBCL IN), IndiaMart (INMART IN) & Gopal Snacks (GOPAL IN) are names that we have a bearish view on.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 22

Daily Brief United States: Chicago Board Options Exchange Volatility Index, Haemonetics Corp, Chemours Co/The, nCino, Nexstar Broadcasting Group, Inc, Pbf Energy Inc Class A, MasterCraft Boat Holdings Inc., Iridium Communications, Marathon Digital Holdings, DT Midstream Inc and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

Hedge When You Can, Not When You Have to
Haemonetics Corporation: Expansion of the Vascular Closure Market & Other Major Drivers
The Chemours Company: Expansion of Fluoropolymer Applications & Dealing With Fluctuating Demand! – Major Drivers
nCino Inc.: The Tale Of International Market Penetration & Product Localization! – Major Drivers
Nexstar Media Group: Will Its Strategic Focus on Political Advertising Result In A Solid Financial Performance? – Major Drivers
PBF Energy Inc.: Tackling The Challenges of Maintaining Competitive Market Positioning! – Major Drivers
Mastercraft Boat Hldngs In (MCFT) – Friday, Jul 19, 2024
IRDM: The Matrix of Metric Changes
Marathon Digital Holdings: The Story Of Synergistic AI & Bitcoin Mining Operations! – Major Drivers
DT Midstream Inc.: Leveraging LNG Growth & Commercial Growth Opportunities To Change The Game! – Major Drivers

Hedge When You Can, Not When You Have to

By Alpha Exchange

Seller understanding that product may not sell immediately, similar to rainy day insurance with put options
Tight correlation between supply, demand, and prices in liquid markets like put options
Market risk climate currently influenced by high implied volatility due to upcoming events like elections, similar to date certain macro events in the past like Brexit or company earnings dates

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Haemonetics Corporation: Expansion of the Vascular Closure Market & Other Major Drivers

Haemonetics Corporation’s first quarter fiscal year 2025 results reveal mixed outcomes in a challenging market scenario.
The company reported a revenue of $336 million, which represents an 8% increase on a reported basis and a 3% organic growth.
Despite the revenue growth, the adjusted earnings per diluted share decreased by 3% to $1.02, reflecting some strain from operational challenges and the dynamic market conditions.

The Chemours Company: Expansion of Fluoropolymer Applications & Dealing With Fluctuating Demand! – Major Drivers

The Chemours Company faced various challenges in the second quarter of 2024, yet demonstrated resilience and adaptability in managing these issues.
Key points from the earnings call include the impact of a severe drought on their titanium dioxide production at Altamira, Mexico, which led to unplanned downtime and an $8 million cost for the quarter.
Despite this, Chemours was proactive in addressing the immediate needs of affected employees and the community while optimizing production to meet customer demands, achieving a 16% increase in volumes compared to the first quarter.

nCino Inc.: The Tale Of International Market Penetration & Product Localization! – Major Drivers

nCino has posted its financial results for the second quarter of fiscal year 2025, delivering performance that exceeded initial forecasts in several key areas, including subscription revenues and non-GAAP operating income.
The company has observed a notable improvement in the financial services industry in the United States compared to the previous year.
nCino’s growth in the U.S. has been robust, particularly within its existing customer base which seems keen on leveraging the company’s expanded platform capabilities.

Nexstar Media Group: Will Its Strategic Focus on Political Advertising Result In A Solid Financial Performance? – Major Drivers

Nexstar Media Group’s second quarter of 2024 delivered robust overall performance as the company continued to showcase its ability to navigate challenging market dynamics effectively.
As discussed during the recent earnings call, Nexstar achieved record total net revenue and distribution revenue, underscoring its strategic success in optimizing revenue streams amid continued industry shifts.
Particularly noteworthy was the substantial growth in adjusted EBITDA and adjusted free cash flow, which highlights disciplined execution across operational facets.

PBF Energy Inc.: Tackling The Challenges of Maintaining Competitive Market Positioning! – Major Drivers

PBF Energy’s second quarter 2024 earnings presentation reveals a mixed financial landscape marked by challenges and strategic achievements.
Despite experiencing weaker-than-expected earnings, the company successfully maintained a robust cash position and further advanced its operational goals.
The quarter faced unusual market conditions where RIN-adjusted crack spreads saw a significant decrease, contributing to tighter margins across the board.

Mastercraft Boat Hldngs In (MCFT) – Friday, Jul 19, 2024

By Value Investors Club

Boat OEM industry facing drop in demand post high sales period due to Covid
MasterCraft has strong position in ski/wake category, a niche market
Despite challenges from tepid retail demand and high inventory levels, MasterCraft could benefit from ski/wake category strength in long term

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

IRDM: The Matrix of Metric Changes

By Hamed Khorsand

IRDM started 2024 with changes to its reporting metrics and that trend continued when with Q3.
When IRDM reported third quarter 2024 results, the Company disclosed it would experience a decline in reported IOT subscriber metrics.
The change subscriber count would not impact IRDM’s revenue due to contract pricing. It could create negative headwind in 2025

Marathon Digital Holdings: The Story Of Synergistic AI & Bitcoin Mining Operations! – Major Drivers

Marathon Holdings’s second quarter of 2024 brought both the continuation of bold initiatives and a renewal of challenges marked by increased operational expenses and pressure on profitability.
The company underlined its commitment to expanding operations and scaling infrastructure, leading to notable achievements such as strategic acquisitions and technological advancements.
Noteworthy is the growth in the company’s hash rate and the acquisition of the Garden City data center, which collectively aim to steer Marathon Holdings towards reaching an operational hash rate of 50 exahash by year-end.

DT Midstream Inc.: Leveraging LNG Growth & Commercial Growth Opportunities To Change The Game! – Major Drivers

DT Midstream reported strong financial results in the second quarter of 2024, continuing to align with their full-year plans.
President and CEO David Slater confirmed the reaffirmation of their 2024 adjusted EBITDA guidance range and provided a positive outlook for 2025.
The quarter highlighted several strategic advancements, particularly in organic growth projects which are expected to drive future earnings.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 22

Daily Brief Indonesia: Global Digital Niaga Tbk PT and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

Global Digital Niaga (BELI IJ) – Vote of Confidence

Global Digital Niaga (BELI IJ) – Vote of Confidence

By Angus Mackintosh

Global Digital Niaga (BliBli) will issue new shares through a private placement to Djarum Group, underlining the strong support from its parent as it continues to expand its omnichannel business.
The company is also close to completing a large-scale distribution centre in West Java to expand its logistics capacity and has also indicated expanding fintech exposure.
BliBli saw sharp improvements in take rates and profitability in 1H2024 as it focused on improving product mix. Net profit profitability is expected in FY2025.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 22

Daily Brief China: JD.com , Horizon Robotics, S.F. Holding, T.S. Lines, JNBY Design Ltd, SGX Rubber Future TSR20, Corn Active Contract, China Shineway Pharmaceutical and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Capping Flows in December
Horizon Robotics (9660 HK) IPO: Valuation Insights
SF Holding Pre-IPO: Proposed Interim & Special Dividends of 1.40 CNY Per Share Ahead of HK Listing
T.S. Lines Pre-IPO – PHIP Updates – Shipping Volumes Improved, However Paid Another Large Dividend
JD.com (9618-HK): Positive Technical Analysis Signals
JNBY (3306 HK): >34% ROCE Track Record/10% Dividend Yield/Net Cash Business
Helixtap China Report: Declining Inventory Point At Improved Demand; Sustainability Questionable
China’s Corn Under Extreme Weather Threat // Bad News Again for Orange Production
China Shineway Pharmaceutical (2877.HK) – Performance Would Pick up in 24H2

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Capping Flows in December

The December rebalance for the HSIII Index only involves capping to limit stocks to 12% of the index weight. There will not be any constituent changes.
Estimated one-way turnover at the rebalance is 4.4% resulting in a round-trip trade of HK$2.9bn (US$378m).
The largest outflows are expected to be from Meituan (3690 HK) and JD.com (9618 HK) with inflows spread across the other index constituents.

Horizon Robotics (9660 HK) IPO: Valuation Insights

Horizon Robotics (9660 HK), a provider of autonomous driving products and services, is seeking to raise up to US$696 million through a HKEx IPO.
We previously discussed the IPO in Horizon Robotics (9660 HK) IPO: The Bull Case and Horizon Robotics (9660 HK) IPO: The Bear Case.
Our valuation analysis suggests that Horizon is unattractively valued at the IPO price range. Therefore, we would pass on the IPO.

SF Holding Pre-IPO: Proposed Interim & Special Dividends of 1.40 CNY Per Share Ahead of HK Listing

By Daniel Hellberg

SF Holding proposes interim & special dividends for owners of A-shares
Combined cash dividend totals 1.40 CNY per share, yielding about 3.3%
Meeting October 29 to approve dividends, Q3 results, planned HK listing

T.S. Lines Pre-IPO – PHIP Updates – Shipping Volumes Improved, However Paid Another Large Dividend

By Clarence Chu

T.S. Lines (TSL HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO.
T.S. Lines (TSL) is a container shipping firm primarily operating in the Asia Pacific (APAC) region.
In a previous note, we looked at the firm’s past performance. In this note, we talk about the recent updates from its filings.

JD.com (9618-HK): Positive Technical Analysis Signals

By Wium Malan, CFA

Despite a share price correction this month, JD.com (9618 HK) remains firmly amid an earnings upgrade cycle driven by improved profitability expectations.
Following significant share price volatility over the past 2 months, JD.com’s near-term momentum indicators currently display bullish signals.
JD.com still trades at more than one standard deviation below its 5-year historic average forward PE ratio, and near the lowest level it has ever been.

JNBY (3306 HK): >34% ROCE Track Record/10% Dividend Yield/Net Cash Business

By Sameer Taneja

HK-Listed Apparel & Footwear Screener: Right Stocks Listed in the Wrong Market – Attractive Yield & Rapid Expansion Outside China – Sep 2024 helped us screen out great names.
JNBY Design Ltd (3306 HK), an apparel retailer trading at 9.2x FY24 with a ~10% yield and a long-term track record of >34% 10 Yr-average ROCEs, is one such name.
Even with modest single-digit growth guidance, we see a growing yield and a great cash buffer (20% of the market cap), and dividends are sustainable.

Helixtap China Report: Declining Inventory Point At Improved Demand; Sustainability Questionable

By Arusha Das

Inventory lowest since February 2024
Arbitrage widens for African and Indonesian rubber
Expansion in imports & exports in August

China’s Corn Under Extreme Weather Threat // Bad News Again for Orange Production

By The Commodity Report

China’s Corn Under Extreme Weather Threat China’s corn production is currently under pressure due to extreme weather events in the country.
Still, as it seems this might not be enough to even lift prices up a little bit. Local prices have ticked higher since the end of September, but they’re still close to four-year lows.
Stockpiles of corn are plentiful, and demand is currently sluggish as the second-largest economy of the world battles its own economy demons at the moment.

China Shineway Pharmaceutical (2877.HK) – Performance Would Pick up in 24H2

By Xinyao (Criss) Wang

Shineway’s revenue experienced negative growth in 24H1 as expected, but net profit performance beat expectations (up 27.5% YoY). However, if excluding those one-time gains, net profit was down 14% YoY.
In 24H2, Shineway’s performance is expected to pick up, and YoY revenue growth 2024 full-year would return to positive (e.g. 5-10% YoY). The only concern is TCM formula granule VBP.
China Shineway Pharmaceutical (2877 HK)’s overall financial position is healthy. However, even with large cash balance, the current dividend is not satisfactory, which has more room to improve.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 22

Daily Brief Japan: Fuji Soft Inc, Shinko Electric Industries, Tokyo Metro, TSE Tokyo Price Index TOPIX and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

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
Tokyo Metro (9023 JP) IPO: Trading Debut
Human Capital Initiatives Can Also Be Viewed as Part of Such Autonomous “kaizen” Activities
Tokyo Metro IPO Trading – Robust Demand for Quality Asset

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.

Tokyo Metro (9023 JP) IPO: Trading Debut

Tokyo Metro (9023 JP) priced its IPO at JPY1,200 per share to raise gross proceeds of US$2.3 billion. The shares will start trading on 23 October.
We previously discussed the IPO in Tokyo Metro (9023 JP) IPO: The Bull Case, Tokyo Metro (9023 JP) IPO: The Bear Case and Tokyo Metro (9023 JP) IPO: Valuation Insights.
The peers have modestly derated since the prospectus was released on 20 September. The IPO price remains attractive, particularly relating to the implied dividend yield.

Human Capital Initiatives Can Also Be Viewed as Part of Such Autonomous “kaizen” Activities

By Aki Matsumoto

A year after human capital disclosure became mandatory, little progress was made, but few companies, even those in top 100 in market capitalization, have self-assessed their milestones and actual progress.
While it was favored that companies with higher scores on human capital disclosure outperformed in stock price, it is reasonable to assume that multiple other factors had an impact.
Some companies formulated growth strategies by presenting clear cash/capital allocations and have actually achieved improved capital profitability. Human capital initiatives can be viewed as part of such autonomous “kaizen” activities.

Tokyo Metro IPO Trading – Robust Demand for Quality Asset

By Sumeet Singh

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.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 22

Most Read: China Traditional Chinese Medicine, Shinhan Financial, Fuji Soft Inc, Shinko Electric Industries, Cambricon Technologies Lt, Tokyo Metro, JD.com , Korea Zinc, Doosan Robotics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

TCM (570 HK): Likely Rush for The Exits As Deal Busts
China Traditional Chinese Medicine (570 HK): Disaster as Offer Lapses, Potential Deal Break Price
Korea Value-Up Index: Estimated Passive Flows as ETF Launches Coming
Fuji Soft (9749 JP) – The Fine Print Is Worth Reading
Shinko Electric (6967 JP) Takeover – THIS Is a Dip to Buy
SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength
Tokyo Metro (9023 JP) IPO: Trading Debut
Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Capping Flows in December
Entry Opportunities from Delisting Risk Due to Korea Zinc’s Post-Buyback Volume Drying Up
Doosan’s Tweaked Restructuring Play: My Take on Hitting Robotics’ 13% Spread

TCM (570 HK): Likely Rush for The Exits As Deal Busts

By David Blennerhassett

China Traditional Chinese Medicine (570 HK) (TCM) has been a frustrating deal, for a deal that shouldn’t be frustrating.
As feared from its 16th October monthly update, the inability to secure investor group consents appears to have torpedoed the transaction. Will we eventually find out why this got stonewalled?
This deal lapse changes the Hong Kong M&A landscape; if you can’t rely on SOE transactions to get up, what next? The immediate question now is downside support on Monday.

China Traditional Chinese Medicine (570 HK): Disaster as Offer Lapses, Potential Deal Break Price

Shockingly, the Sinopharm-led consortium’s offer for China Traditional Chinese Medicine (570 HK) has lapsed as the precondition long stop date has not been extended.
This deal break caught many, including me, off guard. There are lessons to be learnt and questions to be asked.
Shareholders will have a bruising Monday. Our analysis suggests a deal break price of around HK$3.44, a 10% downside to the last close.

Korea Value-Up Index: Estimated Passive Flows as ETF Launches Coming

The KRX announced the 100 constituents of the much-awaited Korea Value-Up Index on 24 September. There were hits and misses but broad consensus was that the index is a miss.
Following market feedback, the KRX could conduct a special rebalance of the index in December. But this could be after the launch of ETFs tracking the index.
With a big overlap and similar characteristics as the KOSPI 200 Index, there could be limited assets benchmarked to the Korea Value-Up Index in the short-term.

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.

SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength

With over 95% of the review period complete, 4 non-constituents are in inclusion zone and 6 constituents are in deletion zone.
We estimate one-way turnover of 6.5% at the December rebalance leading to a one-way trade of CNY 11.95bn (US$1.7bn). Index arb balances could increase the impact on the stocks.
The potential adds have continued to outperform the potential deletes. There has been a big jump in the last few weeks as markets have rallied. Trim positions into strength.

Tokyo Metro (9023 JP) IPO: Trading Debut

Tokyo Metro (9023 JP) priced its IPO at JPY1,200 per share to raise gross proceeds of US$2.3 billion. The shares will start trading on 23 October.
We previously discussed the IPO in Tokyo Metro (9023 JP) IPO: The Bull Case, Tokyo Metro (9023 JP) IPO: The Bear Case and Tokyo Metro (9023 JP) IPO: Valuation Insights.
The peers have modestly derated since the prospectus was released on 20 September. The IPO price remains attractive, particularly relating to the implied dividend yield.

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Capping Flows in December

The December rebalance for the HSIII Index only involves capping to limit stocks to 12% of the index weight. There will not be any constituent changes.
Estimated one-way turnover at the rebalance is 4.4% resulting in a round-trip trade of HK$2.9bn (US$378m).
The largest outflows are expected to be from Meituan (3690 HK) and JD.com (9618 HK) with inflows spread across the other index constituents.

Entry Opportunities from Delisting Risk Due to Korea Zinc’s Post-Buyback Volume Drying Up

Korea Zinc’s delisting daily trading volume cutoff is 20K, about 0.12% of the total. We might see volumes plummet, making it tough to maintain even that 20K level.
Keep an eye on trading opportunities; we have some time with delisting risks, but low trading volume could lead to being booted from the KOSPI 200 and Global Index.
This sell-off could spike short-term volatility and create great entry points for trading, especially after the court approved the buyback tender, denying MBK’s injunction.

Doosan’s Tweaked Restructuring Play: My Take on Hitting Robotics’ 13% Spread

The big question is how to cash in on the dissenters’ rights spread for Robotics. The main concern is cancellation risk, but the FSS doesn’t seem too negative on approval.
To sustain nuclear momentum, Enerbility needs heavy borrowing for facility investments, requiring a lower debt ratio. Offloading debt-heavy Bobcat is a move shareholders might support.
With NPS unlikely to ignore the government’s nuclear push, Robotics’ spread could narrow quickly. Despite cancellation risk and no hedge, the remaining juice makes an outright position worth considering.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Analytics and News
✓ Events & Webinars

Oct 22

Daily Brief Industrials: Tokyo Metro, Doosan Robotics , S.F. Holding, T.S. Lines, Danaher Corp, Ocean Wilsons Holdings, General Dynamics, Amaero International Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Tokyo Metro (9023 JP) IPO: Trading Debut
Doosan’s Tweaked Restructuring Play: My Take on Hitting Robotics’ 13% Spread
SF Holding Pre-IPO: Proposed Interim & Special Dividends of 1.40 CNY Per Share Ahead of HK Listing
T.S. Lines Pre-IPO – PHIP Updates – Shipping Volumes Improved, However Paid Another Large Dividend
Tokyo Metro IPO Trading – Robust Demand for Quality Asset
Danaher Corp (DHR) – Monday, Jul 22, 2024
Ocean Wilsons Holdings – Sale of Wilson Sons investment
General Dynamics Corp (GD) – Friday, Jul 19, 2024
Amaero International Ltd – First commercial sales achieved in Q1

Tokyo Metro (9023 JP) IPO: Trading Debut

Tokyo Metro (9023 JP) priced its IPO at JPY1,200 per share to raise gross proceeds of US$2.3 billion. The shares will start trading on 23 October.
We previously discussed the IPO in Tokyo Metro (9023 JP) IPO: The Bull Case, Tokyo Metro (9023 JP) IPO: The Bear Case and Tokyo Metro (9023 JP) IPO: Valuation Insights.
The peers have modestly derated since the prospectus was released on 20 September. The IPO price remains attractive, particularly relating to the implied dividend yield.

Doosan’s Tweaked Restructuring Play: My Take on Hitting Robotics’ 13% Spread