In today’s briefing:
- Crunching Passive Impact Numbers for KRX Value-Up Index Names, Based on KRX’s Free-Float Rate Data
- MBK Raises Tender Prices: ₩750,000 for Korea Zinc & ₩25,000 for Young Poong Precision
- MBK Raises Tender Offer Price on Korea Zinc by 13.6% to 750,000 Won
- Tohokushinsha (2329 JP) To 3D – “Not Today”; 3D May Go To The Mattresses
- DFI Exits Yonghui, MINISO Enters: Who Got The Short End Of The Stick?
- Capitol Health (CAJ AU)/Integral Diagnostics (IDX AU): 31st Oct Merger Vote
- NIFTY Indices: Flows (Post Capping) At the Close Tomorrow; Round-Trip US$3.3bn
- Unicredit Is Moving Fast
- MBK Bumps Offers For Both Korea Zinc and Young Poong Precision
Crunching Passive Impact Numbers for KRX Value-Up Index Names, Based on KRX’s Free-Float Rate Data
- KRX 300 hit 1 trillion won AUM fast, but with local pensions more aggressive, the value-up’s early AUM could top 1 trillion, hitting up to 3 trillion in six months.
- Hanjin KAL, S1 Corp, Hyundai Elevator, Nice Info, and Huchems are set for strong price action. The financial sector also stands out, seeing the biggest impact compared to other sectors.
- Small caps under 1 trillion won see little passive impact, but solid plays exist under 3 trillion, so splitting large and small caps won’t limit target options much.
MBK Raises Tender Prices: ₩750,000 for Korea Zinc & ₩25,000 for Young Poong Precision
- Hankyung reports MBK will raise Korea Zinc’s tender offer to ₩750,000 (14%) and Young Poong Precision’s to ₩25,000 (25%) before today’s market opens.
- Hankyung and Maeil are top sources for market scoops, so it’s almost certain MBK leaked the tender price hike ahead of today’s trading.
- MBK leaves Choi just five trading days to respond. Korea Zinc plans to raise ₩400 billion, but it’s still not enough for a counter-bid.
MBK Raises Tender Offer Price on Korea Zinc by 13.6% to 750,000 Won
- MBK announced that it will raise the tender offer prices on Korea Zinc by 13.6% to 750,000 won and Young Poong Precision by 25% to 25,000 won.
- If 100% of the 3,024,881 shares of Korea Zinc tender offer is completed, at the revised tender offer price of 750,000 won, this would be 2.27 trillion won in amount.
- In term of probabilities, we would put a 80-85% probability that MBK/Jang family successfully completes the tender offers and takes over the controlling stakes of these two companies.
Tohokushinsha (2329 JP) To 3D – “Not Today”; 3D May Go To The Mattresses
- 3D Investment Partners bought 5% of Tohokushinsha Film (2329 JP) by Mar-2023. A year later they had 17+%. 3D proposed changes. In July, 3D proposed a takeover, asking for DD.
- Tohokushinsha responded to the proposals, then offered due diligence to 3D based on terms set by a Special Committee. 3D did not want those strict DD terms.
- Yesterday, Tohokushinsha said “Fine.” The stock today fell 10% today. This is not a stalemate, but it means 3D may start to play harder.
DFI Exits Yonghui, MINISO Enters: Who Got The Short End Of The Stick?
- Low-Cost retailer MINISO (9896 HK) has entered into SPAs to acquire a 29.4% stake in supermarket chain Yonghui (601933 CH) from DFI (DFI SP) and two units of JD.com (9618 HK).
- Upon the completion of this US$890mn transaction, which is subject to regulatory and shareholder approvals, MINISO would become Yonghui’s largest shareholder. And DFI would exit its entire stake.
- Ye Guofu, MINISO’s founder/chairman, views the transaction “With a brave heart, start a new world!”. Yonghui has been spilling red ink since FY21. Perhaps “brave soul” is more apt.
Capitol Health (CAJ AU)/Integral Diagnostics (IDX AU): 31st Oct Merger Vote
- On the 18th July, diagnostic imaging provider Capitol Health (CAJ AU) entered a Scheme with Integral Diagnostics (IDX AU). IDX will issue 0.12849 new IDX shares for each Capitol share
- Upon completing the transaction, Integral would hold ~63% in the MergeCo. They key risk is the ACCC signing off. A decision is expected on (or around) the 28th November.
- The Scheme Booklet is now out, with a Scheme Meeting to be held on the 31st October. Expected implementation on the 14th November. The IE says fair & reasonable.
NIFTY Indices: Flows (Post Capping) At the Close Tomorrow; Round-Trip US$3.3bn
- The NIFTY Index, Nifty Next 50 Index, NSE Nifty Bank Index, CNXIT Index, Nifty Midcap 150 Index, Nifty100 Low Volatility30 Index and the CPSE ETF rebalance at the close tomorrow.
- The round-trip trade across the indices is US$3.3bn and there are 13 stocks with over 1 day of ADV to trade from passive trackers.
- Stocks with the largest inflows are Trent, Bharat Electronics, Canara Bank, Bharat Heavy Electricals, Oil & Natural Gas Corp, Coal India, Hindustan Aeronautics and InterGlobe Aviation.
Unicredit Is Moving Fast
- UniCredit SpA (UCG IM) has raised its Commerzbank AG (CBK GR) stake to 21%; Chancellor Scholz called it “hostile takeover”. UniCredit also filed to increase its stake up to 29.9%.
- Commerzbank’s valuation multiples remain attractive, as despite a 21.3% rise in its stock, it still trades at a price-to-book ratio (P/B) of just 0.57x, compared to UniCredit’s 0.98x.
- The conditions remain favorable for a potential premium acquisition by UniCredit, as acquiring Commerzbank makes both strategic and financial sense. Thus I recommend to buy Commerzbank speculatively.
MBK Bumps Offers For Both Korea Zinc and Young Poong Precision
- MBK Partners has increased the Tender Offer prices for Korea Zinc (010130 KS) by 13.6% to ₩750,000 and Young Poong Precision (036560 KS) by 25% to ₩25,000.
- All other terms remain the same. IF MBK secures the maximum 14.61% in KZ, this will be Korea’s largest-ever Tender Offer.
- MBK made a public offering correction announcement today. The Choi family now has 5 business days in which to respond with a counteroffer.
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