In today’s briefing:
- JAFCO (8595) Cancels Tender Offer – I Offer a Modest Proposal For Good Governance
- China Rebalances at the Close Today- BIG Flows
- Nitro Software (NTO AU): Potentia Raises to A$2.00 as the Battle Heats Up
- Infosys (INFY)’s US$1.1bn Buyback
- KODEX Battery Rebalancing Results Out: From Today to Next Tuesday
- Targetable Names on KOSPI for Dividend Arbitrage: DPS Estimates & Current Basis
- EQD | KOSPI2 Index: Short-Term Trading Opportunity Using Derivatives
- Nitro Software: Potentia Matches KKR’s $2.00/Offer
JAFCO (8595) Cancels Tender Offer – I Offer a Modest Proposal For Good Governance
- Jafco Co Ltd (8595 JP) announced the reference period VWAP for the Tender Offer Buyback was ¥2,362.4136 vs target ¥2,525. Murakami-san refused to play, so the Tender Offer is cancelled.
- This is good news and bad news. The announcement wording doesn’t make JAFCO look good, but they will continue discussions with City Index Eleventh. But there is potential.
- I shall now therefore humbly propose my own thoughts, which I hope will not be liable to the least objection (Jonathan Swift, 1729)
China Rebalances at the Close Today- BIG Flows
- There are multiple local China indices that rebalance at the close of trading today. Plus MSCI China and FTSE All-World/All-Cap flows due to changes to the Northbound StockConnect Buy-and-Sell list.
- China Pacific Insurance (Group) Co., (601601 CH) replaces Beijing-Shanghai High Speed Railway-A (601816 CH) in the FTSE China A50 Index (XIN9I INDEX).
- The round-trip turnover at the close of trading today should be in excess of US$8bn.
Nitro Software (NTO AU): Potentia Raises to A$2.00 as the Battle Heats Up
- Nitro Software Ltd (NTO AU) has received a revised Potentia off-market takeover offer at A$2.00 per share, an 11.1% premium to its previous offer and in line with Alludo’s offer.
- By bumping its offer, adding a scrip alternative and signalling a potentially higher price on due diligence access, Potentia has ramped up the pressure on the Board.
- Potentia/Alludo offer remains at the low end of the IE’s valuation range. Alludo would have anticipated this move and likely will have factored in the need to raise its offer.
Infosys (INFY)’s US$1.1bn Buyback
- Infosys Ltd (INFO IN) (Infosys Ltd Sp Adr (INFY US)) on 5-6 December announced an on-market buyback of more than US$1.1bn.
- The company has done buybacks before, and it is worthwhile looking at the details.
- The buy-back looks small, and may be impactful near-term in near-space.
KODEX Battery Rebalancing Results Out: From Today to Next Tuesday
- As expected, Sungeel Hitech (365340) made it to the index. And C&I System (222080) and Wonik PNE (217820) were added, whereas Ecopro (086520) and Dongwha Enterprise (025900) were deleted.
- Among the existing constituents, Samsung SDI (006400), Ecopro BM (247540), SK Innovation (096770), L&F (066970), and SKC (011790) are expected to have a relatively significant impact.
- Looking at the last rebalancing, the impact/price correlation was most significant on Day 1. So, we should consider aiming for LONG/SHORT today for those with a high relative impact.
Targetable Names on KOSPI for Dividend Arbitrage: DPS Estimates & Current Basis
- Targetable names on KOSPI for dividend arbitrage: SK Telecom (017670), Woori Financial (316140), SK Hynix (000660), KB Financial (105560), Korea Zinc (010130), and HMM (011200)
- Samsung Electronics (005930)‘ basis does not reflect special dividends, even though speculations have not disappeared entirely.
- As the current basis hasn’t widened to an entirely sufficient level, we need to target arb trade openings focusing on the above stocks a bit more aggressively.
EQD | KOSPI2 Index: Short-Term Trading Opportunity Using Derivatives
- KOSPI2 Index failed to break above the 200dma and has retreated
- The index has now fallen back towards the 50dma and we see an short-term opportunity to play the upside
- Use weekly options to play a short-term bounce and get the best risk-reward
Nitro Software: Potentia Matches KKR’s $2.00/Offer
- Potentia Capital has bumped its Offer for Nitro Software Ltd (NTO AU) to A$2.00/share, matching KKR’s earlier Offer.
- Potential’s proposal – which also boasts a scrip alternative for those investors wishing to remain invested – is open for tendering, and has no minimum acceptance threshold.
- Nitro’s board has yet to provide a view on Potentia’s revised terms.
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