In today’s briefing:
- FSS Bans Arb in Local MM Books: Identifying Opportunities from Short-Term Inefficiencies
- TKP Corp (3479) – A Second Big Buyback In Short Order
- Quiddity HK Connect Northbound Tracker (Q1 2025 Vs 5 Previous Quarters)
- Dongwon F&B: Delisting and Incorporation as a Wholly Owned Subsidiary of Dongwon Industries
- Dropped the Line: Telefónica Disconnects from Peru
- Running on Fumes: Wood Group’s Last Shot with Sidara
FSS Bans Arb in Local MM Books: Identifying Opportunities from Short-Term Inefficiencies
- The FSS is banning arb trades under the MM book, requiring separate books for any arb positions to keep them distinct from MM flow.
- Most local shops lack the resources to set up a separate arb desk. Splitting teams, creating new workflows, and hiring extra staff isn’t feasible given their tight P&L.
- Building a tracker for MM dropouts could spot dislocations, as the crackdown creates short-term inefficiencies—if we’re dialed in, there’s alpha to be made.
TKP Corp (3479) – A Second Big Buyback In Short Order
- TKP Corporation (3479 JP) is a fascinating little company. It rents space. From people. To people. Then adds on services. Meeting, recruiting, training, seminar, banquet, party, etc rooms.
- Last year they bought control of two small businesses to add features. Revenues are up. The new FY suggests revenue growth, OP growth, and now a buyback.
- The buyback is the interesting bit. They did one last FY with interesting parameters, and Quiddity has a new tool we are trying out, so we showcase an example here.
Quiddity HK Connect Northbound Tracker (Q1 2025 Vs 5 Previous Quarters)
- Last August, the mainland exchanges stopped providing data on Northbound positions and trading. They decided to show the data once a quarter.
- We decided to add a tool to the repertoire to show this past quarter’s flows per Northbound-eligible stock in a variety of ways.
- Click on a name and get the quarterly chart of the desired metric (position, Flow (shares), Flow as % of float or shares out, etc)
Dongwon F&B: Delisting and Incorporation as a Wholly Owned Subsidiary of Dongwon Industries
- Dongwon Group’s decision to merge Dongwon F&B and Dongwon Industries into one company is a positive move.
- Dongwon F&B will be incorporated as a wholly-owned subsidiary of Dongwon Industries and will be delisted.
- Post stock swap between Dongwon Industries and Dongwon F&B, the surviving entity (Dongwon Industries) is a likely candidate for KOSPI 200 inclusion in 2H 2025/2026.
Dropped the Line: Telefónica Disconnects from Peru
- Telefónica sold its Peruvian subsidiary to Integra Tec for €0.9 million, transferring €1.24 billion in debt, following the unit’s bankruptcy filing and prolonged tax disputes in Peru.
- The sale marks a strategic step in Telefónica’s Hispam exit, following disposals in Argentina and Colombia, and reinforces the company’s focus on core markets with higher returns.
- Despite crystallizing a €620 million loss, the transaction removes a distressed asset, improves group visibility, and underscores management’s commitment to financial discipline and geopolitical de-risking across Latin America.
Running on Fumes: Wood Group’s Last Shot with Sidara
- Sidara’s 35p offer provides a 40% premium with no dilution, offering certainty and urgently needed capital, making it the most favorable path for shareholders amid financial distress.
- A standalone capital raise of £342m at 20p would dilute existing shareholders by over 71%, highlighting the severe downside if the Sidara deal collapses or fails regulatory approval.
- Having rejected Apollo’s 240p offer in 2023, the Board is now recommending a 35p bid—an 85% discount—after destroying credibility, mismanaging cash, and losing shareholder trust.
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