In today’s briefing:
- JSR (4185 JP) – Activist Murakami-San Goes to 5+%! Bumpitrage? Appraisal Rights? A Technicality?
- JSR Corporation (4185 JP): Murakami Becomes a Substantial Shareholder
- More Long-Term Breakouts in Energy, Utilities, Gold Miners; Bullish Outlook Intact
- TPL: Price & Production
- Criterium Energy Ltd (TSX-V: CEQ): Growth within cashflow
- Morning Views Asia: China Hongqiao, Nickel Industries
JSR (4185 JP) – Activist Murakami-San Goes to 5+%! Bumpitrage? Appraisal Rights? A Technicality?
- In what is a surprising move to me, Murakami-san has gone substantial on JSR Corp (4185 JP) with the vast majority of his stake purchased at a spread of <0.05%.
- As suggested in JIC Launches a NOT-¥1trln Tender Offer for JSR (4185). Welcome? Yes. Overwhelming? Meh, the deal price was not overwhelming. It got less so as the market rose.
- But this is an odd target. High float. No competition. Would take a lot to block or force the bumpitrage, which suggests appraisal rights or a “technicality.”
JSR Corporation (4185 JP): Murakami Becomes a Substantial Shareholder
- Murakami’s City Index Eleventh entity reported a 5.11% position in JSR Corp (4185 JP). The share purchases started on 19 March, the day of the tender start.
- Murakami’s average buy-in price of JPY4,346.22 per share is broadly in line with the JPY4,350 tender offer.
- Murakami’s disclosure suggests two possibilities: starting an activist campaign for a bump or pursuing the appraisal process to determine a fair value. We think the latter is likely.
More Long-Term Breakouts in Energy, Utilities, Gold Miners; Bullish Outlook Intact
- We remain bullish on the S&P 500 and Nasdaq 100 (QQQ), as they both refuse to close below their 20-day MAs or 21-day EMAs for more than 2-3 consecutive days.
- Once we do get 2-3 closes below the 20-day MAs on SPX and QQQ, it would mark the beginning of a pullback (a potentially rapid one, at that)
- Next supports currently at 4983-5050 on the S&P 500 and $425-$433 on QQQ (gap supports from 2/22/24), but anything in the 4800-4930 SPX range is a buyable pullback.
TPL: Price & Production
- The best combination of events for TPL is energy prices and production going up. This year, production levels in the Permian Basin recovered quickly from the seasonal decline.
- The hinderance to TPL’s quarter could come from the price of natural gas, which declined throughout much of the first quarter due to the warmer winter weather
- A majority of TPL’s revenue is from crude oil and natural gas royalties with production becoming the biggest factor in each quarter
Criterium Energy Ltd (TSX-V: CEQ): Growth within cashflow
- The FY24 guidance reflects a self-funded development and debt repayment programme.
- While a reduced capital programme, we believe this is a prudent strategy with upside optionality should additional funds from the Bulu sale or higher oil prices materialize.
- As a result of the Bulu sale not completed yet, Criterium is carrying more debt than we expected (the repayment of US$5.5 mm of debt in March would have also triggered a US$3.8 mm debt write down).
Morning Views Asia: China Hongqiao, Nickel Industries
Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.