In today’s briefing:
- Benefit One (2412): The Plot Thickens
- 40 Names for Dividend Arbitrage in 1Q, Marking a Pioneering Initiative in Korea
- Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?
- KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping
- Quiddity Leaderboard DAX/MDAX Mar 24: Lufthansa, Zalando, Telefonica, Befesa
- Hang Seng Internet & IT Index Rebalance Preview: ZX Inc Could Replace Flowing Cloud
- StubWorld: Unicom’s “Hs” Are Still Cheap
- Liquid Universe of European Ordinary and Preferred Shares: January‘24 Report
- Orion Corp: Concerns About Diversification into LegoChem Bioscience
- Dongwon Industries – Announces Cancellation of 22.5% of Outstanding Shares
Benefit One (2412): The Plot Thickens
- Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
- Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February.
- The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants.
40 Names for Dividend Arbitrage in 1Q, Marking a Pioneering Initiative in Korea
- K200 futures’ yearend contango exceeded expectations, triggering a surge in buy arbitrage. The subsequent selling pressure intensified, with strategic shifts observed in January futures/options, contributing to KOSPI’s underperformance this year.
- Still, significant closure of K200 futures buy arbitrage should come around March, impacting February or March single-stock futures, potentially introducing substantial contango and suggesting lucrative dividend arbitrage in select stocks.
- These 40 K200 constituents, with single-stock futures, are vital for our pioneering dividend arbitrage in Korea, directly influenced by buy arbitrage closures using K200 futures from last year.
Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?
- Ahead of the 17 January close, M3 Inc (2413 JP) has extended the close of its offer to 15 February due to a request from Benefit One Inc (2412 JP).
- The merger arb situation has four parties with different priorities – the Board, Pasona Group (2168 JP), Dai Ichi Life Insurance (8750 JP) (with a pre-conditional JPY2,123 offer) and M3.
- The Board and Pasona want the highest possible price. M3’s inability to table a revised offer suggests that Dai-ichi Life has set the bar too high.
KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping
- With over 40% of the review period complete, there could be 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
- There could be two changes before that if L&F Co Ltd (066970 KS) and HLB Inc (028300 KS) complete their transfer from the KOSDAQ market to the KOSPI market.
- The adds have outperformed the deletes and the KOSDAQ 150 Index since the start of the review period. The ban on short selling could lead to another leg up.
Quiddity Leaderboard DAX/MDAX Mar 24: Lufthansa, Zalando, Telefonica, Befesa
- In this insight, we take a look at the potential ADDs/DELs for the DAX index and the MDAX index in the run up to the March 2024 index rebal event.
- There are currently no changes expected for the DAX changes but Deutsche Lufthansa (LHA GR) and Fresenius Medical Care & (FME GR) are quite close to becoming ADDs.
- For the MDAX index, there could an intra-review change in January 2024 and then one more change in the March 2024 index rebal event.
Hang Seng Internet & IT Index Rebalance Preview: ZX Inc Could Replace Flowing Cloud
- The review cutoff date for the March rebalance of the HSIII was 29 December. The changes will be announced on 16 February and become effective after the close 1 March.
- We see a high probability of Zx Inc replacing Flowing Cloud Technology (6610 HK) in the index. There is a lower probability of 4Paradigm (6682 HK) replacing CMGE Tech (302 HK).
- Capping will result in passives buying Meituan (3690 HK) and selling Tencent (700 HK), Kuaishou Technology (1024 HK), JD.com (9618 HK) and Alibaba Group Holding (9988 HK).
StubWorld: Unicom’s “Hs” Are Still Cheap
- China Unicom Hong Kong (762 HK) remains inexpensive with respect to parent China United Network A (600050 CH) – its hybrid domestic A-share twin – and to peers.
- Preceding my comments on Unicom, 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%.
Liquid Universe of European Ordinary and Preferred Shares: January‘24 Report
- Since mid-December, spreads have generally tightened across our European liquid universe of ordinary and preferred shares (10 have tightened, 7 widened, 2 at same level).
- Recommended trades long preferred / short ordinary shares: Danieli, Grifols (the most interesting situation in this report), Media-for-Europe, Sixt, Volkswagen.
- Recommended trades long ordinary / short preferred shares: Fuchs, Henkel, SSAB Svenska Stal.
Orion Corp: Concerns About Diversification into LegoChem Bioscience
- On 15 January, Orion Corp announced that its subsidiary PAN Orion Corp will purchase a 25.7% stake in Legochem Biosciences for 549 billion won.
- LegoChem Bio specializes in antibody-drug conjugate (ADC) technology. Legochem Bio signed a total of 13 technology transfer contracts amounting to 8.7 trillion won in the past 9 years.
- Most investors in Orion Corp would rather have the company focus on its core confectionery/snack business, rather than expand into high risk/high reward biotech business.
Dongwon Industries – Announces Cancellation of 22.5% of Outstanding Shares
- On 16 January, Dongwon Industries (006040 KS) announced that it will cancel 10.46 million shares, representing 22.5% of outstanding shares.
- We are positive on Dongwon Industries. This large amount of share cancellation will boost the company’s earnings per share and book value per share.
- The shares subject to cancellation are the treasury stocks acquired by Dongwon Industries when it merged with Dongwon Enterprises in 2022.
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