In today’s briefing:
- [JAPAN ACTIVISM] – Murakami Group Bigger and Bolder on Exedy – STILL Room to Run
- Japan – Passive Selling in a Few Weeks & Shorts Build Up
- StubWorld: PCCW’s Premium To NAV Is Unsustainable
- HK RE Series (3): Global Macro Starts to Turn More Supportive, Stock Valuation Is Compelling
- Alpha Generating Opportunities from the Corporate Value Up Disclosures on the KIND System
- Brainbees Solutions (FirstCry) IPO – Not Very Attractive but It Is Relatively Cheap
- Asian Dividend Gems: KT Corp
- (Mostly) Asia-Pac M&A:Ansarada, Southern Cross Gold, A8 New Media, CPMC, Mandala Multifinance, Fancl
- A/H Premium Tracker (To 2 Aug 2024): Policy Commentary Supports Consumers, AH Premia Drifting Wider
- Asia Cement China (743 HK): Scheme Vote on 26 August Has a High Deal Break Risk
[JAPAN ACTIVISM] – Murakami Group Bigger and Bolder on Exedy – STILL Room to Run
- In late May, Toyota Group member Aisin (7259 JP) announced it would sell its 37% stake in Exedy Corp (7278 JP). The market dropped. But that was an opportunity.
- There was an announcement, a ToSTNeT-3 buyback, the offering, and more buyback to come. On 30 May, I said “Buy the deal, buy in the market. It’s cheap and vulnerable.”
- Exedy is up 21% since. On 17 June, activist Murakami-san’s group went over 5%. Then they bought more. Now they have 15%. Or more. Still cheap. Still vulnerable.
Japan – Passive Selling in a Few Weeks & Shorts Build Up
- Up to 12 stocks could be deleted from global passive portfolios in August. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
- There has been a buildup of shorts on nearly all these stocks though the extent of the pre-positioning varies.
- The increase in shorts is smaller than the estimated passive selling, though there is a fair amount of variability across the names.
StubWorld: PCCW’s Premium To NAV Is Unsustainable
- Continued stub losses are one thing. Ballooning PCCW Ltd (8 HK) parent debt is another.
- Preceding my comments on PCCW and HKT Ltd (6823 HK) are the current setup/unwind tables for Asia-Pacific Holdcos.
- .These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
HK RE Series (3): Global Macro Starts to Turn More Supportive, Stock Valuation Is Compelling
- We look at the global macro themes that are impacting the equity market including the US election, the Fed and China’s latest rate cut
- We also look at the latest condition in Hong Kong, including the rates, the economy and the physical RE market
- HK RE stocks continue to trade at compelling valuation, but fund flows are needed if we want a re-rating
Alpha Generating Opportunities from the Corporate Value Up Disclosures on the KIND System
- One of the key takeaways of the Corporate Value Up disclosures on the KIND system is that it could potentially lead to alpha generating investing opportunities.
- Since the last week of May, there have been 7 companies that provided specific Corporate Value up programs; (4 major financials) have outperformed KOSPI.
- Companies such as KB Financial and Shinhan Financial that provide more meaningful Corporate Value Up action plans are likely to have greater impact on their share prices.
Brainbees Solutions (FirstCry) IPO – Not Very Attractive but It Is Relatively Cheap
- BrainBees Solutions is looking to raise up to US$500m in its upcoming India IPO.
- FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
- In our previous notes, we looked at the company’s past performance. In this note, we will talk about valuations.
Asian Dividend Gems: KT Corp
- We have a Positive view of KT Corp (030200 KS) due to three main reasons.
- First, KT has started to implement aggressive capital return policy (returning 50% of net income through dividends and share buybacks/cancellations). Two other reasons include Corporate Value Up and higher Smartscore.
- KT Corp has been the best performing stock among the three major Korean telcos in the past one year. KT Corp’s shares are up 27.9% in the past one year.
(Mostly) Asia-Pac M&A:Ansarada, Southern Cross Gold, A8 New Media, CPMC, Mandala Multifinance, Fancl
- I tally 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Quite week – no new deals were discussed this week on Smartkarma ….
- Key updates took place on Ansarada Group (AND AU), Southern Cross Gold (SXG AU), A8 New Media (800 HK), CPMC Holdings (906 HK), Mandala Multifinance (MFIN IJ), and Fancl (4921 JP).
A/H Premium Tracker (To 2 Aug 2024): Policy Commentary Supports Consumers, AH Premia Drifting Wider
- The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- SOUTHBOUND inflow strong. SOEs, Tencent, and Xiaomi leading. NORTHBOUND down four of five days this week, but net inflows on the week. Consumer discretionary bad.
- Hs underperformed As again. 20d AH Premia performance is at the top of its multi-year range. I’d expect AH Premia to decline the next couple of weeks.
Asia Cement China (743 HK): Scheme Vote on 26 August Has a High Deal Break Risk
- Asia Cement China (743 HK)’s IFA opines that Asia Cement (1102 TT)’s HK$3.22 privatisation offer is fair and reasonable. The scheme vote is on 26 August.
- The IFA valiantly justifies that an offer materially below net cash is fair and reasonable. The crux of the justification lies in the fortuitous disclosure of material capex requirements.
- While no shareholder holds the 10% blocking stake, the high AGM minority participation rates, retail opposition and unconvincing IFA report suggest a high chance of a deal break.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
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
