In today’s briefing:
- [JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing?
- Jeisys Medical (287410 KS): Archimed’s Delisting Offer
- Korea’s Finalized Short-Selling Rules Include Limiting 90-Day Short Position Extensions
- Medical Data Vision (3902) – SBI Upping Their Stake AGAIN In The Market
- CMCDI (133 HK): AGM Outcome May Provide Another Leg-Up
- ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light
- Bapcor (BAP AU): Bain’s Opportunistic A$5.40 Offer
- KOSDAQ Global Rebalancing This Week: Trading Considerations
- Rakuten Bank (5838 JP) – The Bank in Current Form and the Promise of FinTech Reorganization
- Alumina (AWC AU): Scheme Vote on 18 July
[JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing?
- In Oct2023, activist Palliser Capital launched a campaign on well-known “stub trade” Keisei Electric Railway Co (9009 JP) (1.6% stake). The proposal? Monetise OLC, invest for growth, be shareholder friendly.
- Keisei responded 3+mos ago: buyback and 1% OLC stake sale but said OLC would remain an equity affiliate. Palliser re-engaged in late April (Japanese/English and two AGM agenda items). Keisei objected.
- Palliser made their case, Glass Lewis and ISS support Palliser. Palliser likely cannot win. The goal here isn’t to win though. It is to get enough to raise management consciousness.
Jeisys Medical (287410 KS): Archimed’s Delisting Offer
- Aesthetic laser maker Jeisys Medical (287410 KS) has announced French PE outfit Archimed SAS is seeking to delist the company.
- Archimed intends to acquire 72% of Jeisys at ₩13,000, a 20.82% premium to undisturbed. Archimed has also inked agreements with founders/directors for 26.44%, taking its possible % acquisition to 98.44%.
- A Korean medical device maker – not another Eoflow (294090 KS)?! Jeisys did face a patent infringement case from Syneron Medical (ELOS US) in 2018; but since resolved.
Korea’s Finalized Short-Selling Rules Include Limiting 90-Day Short Position Extensions
- The government will announce short selling improvements Thursday. A leaked detail includes limiting 90-day short position extensions.
- Limiting the 90-day short position holding period may ease local investor concerns, but it could shrink the short selling market, potentially affecting overseas fund outflows.
- Resuming short selling in early July may bring new flow patterns due to temporary distortions from mandatory repayment within 90 days and limitations on position extensions, increasing price impacts.
Medical Data Vision (3902) – SBI Upping Their Stake AGAIN In The Market
- Today after the close, SBI Holdings (8473 JP) – which currently owns 32.4% of Medical Data Vision (3902 JP) – announced it would buy another 1.91mm shares over 7mos.
- This market purchase would lift them to ~37.4% by year-end. Interestingly, they plan to go through the one-third level without a Tender Offer. But their buying history hasn’t been great.
- SBI bought 20% in 2020. It fell by half. They bought another 5%. Then it dropped 50%, so they bought another 5%. Now -25% so they are buying another 5%.
CMCDI (133 HK): AGM Outcome May Provide Another Leg-Up
- Activist Argyle Street’s approach to closed-end investment company China Merchants China Direct Investments (133 HK) (CMCDI) has a certain David Webb-like quality.
- Apart from the deep value angle, the analysis of director Elizabeth Kan’s potential conflict of interest is particularly insightful. Argle will vote against Kan’s re-election at the 20th June AGM
- Given this upcoming vote, as I’ve done with Giordano (709 HK) and L’Occitane (973 HK) previously, it’s useful to investigate the lesser-known shareholder register, a byproduct of investigative disclosure reports.
ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light
- CSR Ltd (CSR AU) is expected to stop trading on 19 June following the acquisition by Cie De Saint-Gobain (SGO FP).
- Judo Capital (JDO AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June to replace CSR Ltd (CSR AU).
- There has been short covering in Judo Capital over the last 3 months and there does not appear to be enough positioning for the index inclusion yet.
Bapcor (BAP AU): Bain’s Opportunistic A$5.40 Offer
- In response to media speculation, Bapcor Ltd (BAP AU) disclosed an indicative non-binding proposal from Bain Capital at A$5.40 per share, a 23.9% premium to the last close.
- The offer is opportunistically timed to take advantage of the share price collapse precipitating from the profit warning on 2 May.
- The offer is unattractive. Several substantial shareholders and a high retail base suggest Bain needs to bump. Bain’s offer could also draw other suitors.
KOSDAQ Global Rebalancing This Week: Trading Considerations
- KRX announced KOSDAQ Global rebalancing. Annually in June, effective date follows June options expiry. Passive flow trading on Thursday, the 13th. 49 companies designated, with nine excluded and eleven added.
- Predicting passive capital movement is challenging, but attention must be given to price impacts because reshuffle predictability is low, lacking preemptive trading setups.
- We must anticipate the SSF reshuffle in August, likely including new KOSDAQ Global constituents. KRX plans to list SSFs for all remaining constituents, potentially advancing setup timing for price increases.
Rakuten Bank (5838 JP) – The Bank in Current Form and the Promise of FinTech Reorganization
- Rakuten Bank, in its present form, is positioned to benefit from rising interest rates in Japan, with its low LDR, high cash balances, growing loan book and healthy capital ratio
- The proposed FinTech reorganization of the group around the bank should drive further potential shareholder benefits; higher ROE, lower customer acquisition costs, increased active account penetration and lower operating costs
- We believe that there will be effective governance checks and balances in place to ensure fair valuations of the FinTech segments pre-reorganization; we include our base valuations in this report
Alumina (AWC AU): Scheme Vote on 18 July
- The Alumina Ltd (AWC AU) IE considers Alcoa (AA US)’s scheme offer (0.02854 Alcoa shares per Alumina share) fair and reasonable as the terms are within its valuation range.
- The offer is conditional on FIRB and Alumina/Alcoa shareholder approval. FIRB approval should be forthcoming as Alcoa already owns most of Alumina’s sole assets (AWAC).
- The support of the substantive shareholders and the re-rating of Alcoa shares since 12 March (entry into a SID) has materially lowered the vote risk. This is a done deal.
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