In today’s briefing:
- 7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace
- Haitong Securities (6837 HK)/GTJA (2611 HK) Merger: The Home Stretch
- Bloks (325 HK): Global Index Inclusion Following IPO Lock-Up Expiry
- [Quiddity Index Jan25] KOSPI 200 Leaderboard Jun25: Up to 6 Changes Possible
- Suntec REIT (SUN SP): Tang’s Curious Bump
- Fuji Soft (9749 JP): KKR Extends Again, Delaying the Inevitable Bump
- Quiddity Leaderboard SET50 Jun 25: One Change Possible; Delta on Thin Ice Again
- IDT 2024 Annual Meeting Summary
- Shift Up IPO Lockup – US$1.2bn Lockup Release of Strategic, Employees and IPO Investors
- Brookfield/Neoen: Close to Completion
7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace
- Recent news on the Seven & I Holdings (3382 JP) situation includes better-than-expected possible sale of the SST business, a little headline fear-mongering on national security, and earnings.
- Earnings this year will be volatile vs expectations. Timing (and magnitude) of kitchen-sinking matters. But neither ACT nor you should be buying it based on trough earnings expectations.
- The call transcript is worth listening to. The math on the takeover maths well. This is a buy on dip. Again.
Haitong Securities (6837 HK)/GTJA (2611 HK) Merger: The Home Stretch
- The exchange ratio for the merger between Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) is 0.62x.
- The merger closing is subject to several effectiveness and implementation conditions. The latest update suggests that the remaining conditions are CSRC and HKEx approvals.
- The satisfaction of the remaining conditions is a formality. At the last close and for an end February payment, the gross/annualised spread is 3.2%/26.4%.
Bloks (325 HK): Global Index Inclusion Following IPO Lock-Up Expiry
- Bloks (325 HK) is expected to be assigned an index nationality of Hong Kong instead of China due to its incorporation in the Cayman Islands.
- The security is expected to be added at the September 2025 review following the 6-month IPO lock-up expiry which increases the fcap above the APAC threshold.
- The security is ineligible for the other global index until January 2026 because of the free float being below the minimum threshold of 15%.
[Quiddity Index Jan25] KOSPI 200 Leaderboard Jun25: Up to 6 Changes Possible
- KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
- In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2025.
- We expect six ADDs and six DELs for the KOSPI 200 index during this index rebal event based on the latest available data.
Suntec REIT (SUN SP): Tang’s Curious Bump
- Back on the 5th December, Gordan Tang (& his wife Celine) acquired a 2.14% stake in Suntec REIT (SUN SP), lifting their stake to 31.45% from 29.31%, triggering a MGO.
- This had all the hallmarks of a technical Offer. The Offer price was S$1.16/share compared to the S$1.17/share undisturbed price. The IFA opined the Offer was not fair nor reasonable.
- The Tangs have now bumped to S$1.19/share. Terms are not final. The IFA viewpoint won’t budge. This is an opportunistic move from the Tangs. But why not roll the dice?
Fuji Soft (9749 JP): KKR Extends Again, Delaying the Inevitable Bump
- KKR has extended the close date of the Fuji Soft Inc (9749 JP) second tender offer period from 9 to 24 January. All other terms remain unchanged.
- KKR unconvincingly tries to criticize the Bain offer and unsurprisingly believes there will not be a tender offer by Bain that investors can tender into.
- Despite KKR’s gamesmanship, it has not declared its offer final. A bump remains necessary as Bain remains resolute in launching its offer. The final winning offer could be around JPY10,000.
Quiddity Leaderboard SET50 Jun 25: One Change Possible; Delta on Thin Ice Again
- The SET50 index tracks the performance of the top 50 largest and most liquid names listed on the Stock Exchange of Thailand (SET).
- In this insight, we take a look at the potential ADDs/DELs for SET 50 during the index rebal event in June 2025.
- Currently, we see one expected change, but since the market cap reference period is yet to start, the rankings can fluctuate significantly before the base date.
IDT 2024 Annual Meeting Summary
- An accelerated return of capital looks unavoidable. IDT has a net cash balance sheet yet generates substantial cash every quarter.
- Traditional business is “adding” ice. Investors (including me) view the traditional telecom business as a “melting ice cube,” but IDT’s CFO says the business might start “adding ice.” Key areas of strength include IDT Digital and Mobile Top Up.
- Spin-offs aren’t imminent. NRS is performing incredibly well, but IDT’s CEO doesn’t see a spin-off happening until the business is generating $100MM of EBITDA.
Shift Up IPO Lockup – US$1.2bn Lockup Release of Strategic, Employees and IPO Investors
- Shift Up (462870 KS) raised around US$320m in its South Korean IPO, after pricing at the top. Around US$1.2bn worth of shares will be released from their lockup soon.
- Shift Up is a South Korean games developer, which as released three games so far for the global markets.
- In this note, we will talk about the lockup dynamics and possible placement.
Brookfield/Neoen: Close to Completion
- Brookfield acquired a 53.12% stake in Neoen for €39.85/share, triggering a mandatory tender offer for remaining shares and bonds, aiming for a squeeze-out and delisting Neoen.
- Regulatory approvals were secured from the EU, France, the US, and Australia, addressing antitrust, foreign investment laws, and energy security concerns.
- My PT remains €39.85, in line with the price offered by Brookfield and its partners, which I believe is fair. Completion is expected in Q1 2025. Gross spread is 0.33%.Tender.
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