In today’s briefing:
- Fancl (4921) – Extendy-Extendy-Bumpity-Bumpity
- Examining a Proactive Flow Trading Setup Targeting Korean Value-Up Disclosures
- Stanley Electric (6923) – Salutary Q1 and BIG Buyback
- Why Is Proportionate Shareholder Protection Key to Korea’s Value-Up, and What Is Its Status?
- Charoen Rearranges ThaiBev and TCC’s Deckchairs
- Heiwa Real Estate (8803 JP): Murakami Becomes a Substantial Shareholder
- Ola Electric IPO: Offering Details & Index Inclusion
- Big (Relatively Speaking) NEG (5214 JP) Buyback – Walking The Walk, Faster
- STAR100 Index Rebalance Preview: Potential Adds Diverge Further from Potential Deletes
- A8 New Media (800 HK): Wide Spread Ahead of the 23 August Vote
Fancl (4921) – Extendy-Extendy-Bumpity-Bumpity
- The Kirin Holdings (2503 JP) Tender Offer to buy out minorities in Fancl Corp (4921 JP) closes today. Or at least the current one does.
- The original deal announced was light, and the stock has traded above terms since the announcement, with one fund buying up to 7.94%.
- I expect Kirin to extend and bump next week, or bump/extend now, depending on their visibility on Fancl Q1.
Examining a Proactive Flow Trading Setup Targeting Korean Value-Up Disclosures
- Value-Up plan announcements had a significant immediate price impact, especially for Woori Financial and Shinhan Financial, amplified by recent dividend tax reductions.
- We should target companies likely to announce value-up disclosures soon, focusing on those with prior notices. Notably, KB Financial and DB HiTek have issued prior notices.
- Both companies hold many treasury shares. KB Financial is a dividend stock, with value-up disclosures likely during their Q3 and Q4 earnings announcements.
Stanley Electric (6923) – Salutary Q1 and BIG Buyback
- Today after the close Stanley Electric (6923 JP) announced a salutary Q1 result which was “ahead of in-line” in most metrics towards unchanged H1 and FY guidance.
- The company also announced a BIG on-market buyback at 8.1% of shares out, to be bought back with a delayed start over the 7.5mos starting 13 August.
- At last price, the buyback is ~10mm shares. The details are interesting and are worth a look.
Why Is Proportionate Shareholder Protection Key to Korea’s Value-Up, and What Is Its Status?
- A new tax support framework for Korea’s value-up policy was introduced, but local markets argue that proportionate protection for minority shareholders is crucial for a significant market value increase.
- Korean political leaders are united in supporting this amendment to the Commercial Act, with recent events increasing the likelihood of bipartisan support for this crucial change.
- Given the administration’s commitment to the value-up and recent negative sentiment towards recent restructurings at Doosan and SK, there’s growing potential for minority shareholder protection to take root in Korea.
Charoen Rearranges ThaiBev and TCC’s Deckchairs
- Back on the 18th, the Sirivadhanabhakdi family-backed Thai Beverage (THBEV SP) announced it would swap its 28.78% stake in Frasers Property Ltd (FPL SP) with THBEV-affiliate TCC Assets.
- Under the agreement, TCC will transfer a 41.3% stake in food and beverage play Fraser And Neave (FNN SP) to THBEV, lifting THBEV’s holding to 69.61% from 28.31% currently.
- The share swap triggers no Offers for either F&N or FPL. THBEV says it has no plans to privatise F&N … at the moment.
Heiwa Real Estate (8803 JP): Murakami Becomes a Substantial Shareholder
- Murakami’s entity, City Index Eleventh, and daughter reported a 5.05% position in Heiwa Real Estate (8803 JP). The shares were purchased from 24 May to 22 July.
- Murakami’s average buy-in price is JPY3,907.38, a 6.7% discount to the last close price. Recently, Simplex (the previous largest shareholder) sold its entire stake to Taisei Co Ltd (4649 JP).
- Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. Recent precedents indicate the latter.
Ola Electric IPO: Offering Details & Index Inclusion
- The Ola Electric (1700674D IN) IPO will see the company and existing shareholders sell 808.6m shares at a price range of INR72-76/share, valuing the company between US$3.79bn-US$4bn.
- Ola Electric (1700674D IN) will have a float of around 10% at the time of listing and that will increase to around 20% after the lock-up on anchor investors ends.
- Ola Electric (1700674D IN) could be added to global indices in February and March 2025, but inclusion in local indices with meaningful tracking assets will take longer.
Big (Relatively Speaking) NEG (5214 JP) Buyback – Walking The Walk, Faster
- Today, Nippon Electric Glass (5214 JP) announced an on-market buyback of up to 7.0mm shares (8.08%) spending up to ¥20bn from tomorrow through end-January 2025.
- An impressive headline, but fewer shares. Importantly, this follows a ¥20bn buyback from last November. They are moving through their MTMP more quickly than expected.
- This new buyback is worth about 25% of the inbound cross-holdings. And some of those holders plan to sell. This may be designed to let them sell in the market.
STAR100 Index Rebalance Preview: Potential Adds Diverge Further from Potential Deletes
- The review period for the September rebalance ends 31 July. We expect the changes to be announced 30 August with the implementation taking place after the close on 13 September.
- We forecast 6 changes for the index, including migrations between the STAR100 Index and the STAR50 INDEX. There is uncertainty for a few adds given profitability (or lack of it).
- The outright potential adds have outperformed the outright potential deletes since the start of the calendar year with 12% outperformance in just the last 3 weeks.
A8 New Media (800 HK): Wide Spread Ahead of the 23 August Vote
- A8 New Media (800 HK)’s IFA opines that Mr Liu Xiaosong (Chairman and CEO)’s HK$0.36 privatisation offer to be fair and reasonable. The vote is on 23 August.
- Key conditions include approval by at least 75% of disinterested shareholders (<10% of disinterested shareholders rejection).
- No shareholder holding a blocking stake, low AGM minority participation rate and the massive 162.8% takeover premium suggest a done deal. At the last close, the gross/annualised spread is 5.9%/36.0%.
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