In today’s briefing:
- KRX’s Plan to Integrate KOSPI & KOSDAQ into a Tiered System: Trading Considerations
- Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump
- Kakao’s Kim Beom-Su Arrested: Analyzing Its Impact on Related Companies
- True Wind Raises Partial TOB Price for Sun Corp (6736 JP) By 8%. Not Enough.
- Canvest Environmental (1381 HK): Grandblue’s Pre-Condition Privatisation at HK$4.90
- Robotics+Bobcat Merger: Merger Ratio Revision Possibility & Arb Spread Recalculations
- The Warehouse Group (WHS NZ): Tindall (Potentially) Reloads
- NIFTY50 Index Rebalance Preview: Big Flow, Big Impact, Big Positioning
- Block Deal Sale of Kumho Tire: More Shares Likely to Be Sold by Creditors
- China A50 ETFs Rebalance Preview: Two Changes in September
KRX’s Plan to Integrate KOSPI & KOSDAQ into a Tiered System: Trading Considerations
- The major framework of this realignment is likely decided, integrating KOSPI and KOSDAQ into a tiered system based on liquidity, market cap, and financial status, with periodic replacements.
- The KOSPI 200’s continued existence is uncertain under the new realignment plan, which may shift its role to the value-up index, resembling Japan’s market restructuring model.
- The first-tier market’s entry requirements will likely reflect value-up index criteria, suggesting greater speculative money movement toward the value-up index starting in September.
Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump
- Kirin Holdings (2503 JP)’s JPY8,620 offer for Fancl Corp (4921 JP) closes on 29 July. The shares have traded above terms for 25 out of the 26 trading days.
- MY.Alpha Management has amassed 10.3 million shares (8.51% ownership ratio) with several purchases above terms. MY.Alpha could catalyse other shareholders to rally against a light offer.
- The emergence of MY.Alpha, the high volume above terms, peers re-rating, the required minority acceptance rate, and an offer unattractive to historical trading ranges increase the probability of a bump.
Kakao’s Kim Beom-Su Arrested: Analyzing Its Impact on Related Companies
- Kakao’s Kim Beom-su has been arrested over alleged stock price manipulation in the SM Entertainment buyout, marking a new peak in the company’s legal troubles.
- Kakao Corp’s stock might drop due to the absence of a key figure. KakaoBank could also struggle from uncertainty about its largest shareholder and weakened business ties.
- Kakao’s potential sale of SM Entertainment shares could initially hurt the stock price, but potential bidding interest might boost it.
True Wind Raises Partial TOB Price for Sun Corp (6736 JP) By 8%. Not Enough.
- Today, the final day of the Tender Offer that True Wind Capital launched on 10 June 2024 to buy 19% of Sun Corp (6736 JP), TWC raised its price to ¥4,750/share./
- They also lowered their minimum from 3.7934mm shares (17.0%) to 3.3472mm shares (15.0%).
- As Cellebrite DI (CLBT US) had traded higher, SunCorp had too, and even though shares fell today, they are at ¥4,785/share.
Canvest Environmental (1381 HK): Grandblue’s Pre-Condition Privatisation at HK$4.90
- Canvest Environmental Protection Group (1381 HK) disclosed a pre-conditional Cayman scheme privatisation from Grandblue Environment Co A (600323 CH) at HK$4.90 per share, an 11.6% premium to the last close price.
- The precondition relates to the completion of capital injection into the offeror, Grandblue shareholder, and regulatory approvals. The heavy presence of SOE entities makes this a formality.
- While not a knockout bid, the offer (which is final) is reasonable. Shareholders with blocking stakes will be supportive. Timing is the key risk as the offer is long-dated.
Robotics+Bobcat Merger: Merger Ratio Revision Possibility & Arb Spread Recalculations
- During Kim Byung-hwan’s hearing, he acknowledged market concerns about the Doosan merger, increasing skepticism about Doosan’s ability to maintain the original merger ratio.
- Calculating Bobcat’s net asset value using the net asset value method yields approximately ₩6.1T, derived from ₩5.95T in year-end equity plus ₩0.13T in adjustments.
- Reassess arb trading opportunities; with no short hedge for Robotics, consider an outright long position in Bobcat if its swap price is revised and the spread widens.
The Warehouse Group (WHS NZ): Tindall (Potentially) Reloads
- General merchandise retailer Warehouse Group Limited (WHS NZ) (TWG) has announced it has received an approach from Stephen Tindall and PE outfit, Adamantem Capital Partners
- Founder and major shareholder Tindall holds a shade over 50%. He launched a $1.6bn privatisation attempt in 2006, but Foodstuffs and Woolworths Ltd (WOW AU) effectively blocked the Offer.
- The approach arrives after TWG’s shares trade around multi-year lows.
NIFTY50 Index Rebalance Preview: Big Flow, Big Impact, Big Positioning
- Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) are shoo-ins to replace LTIMindtree (LTIM IN) and Divi’s Laboratories (DIVI IN) in the NIFTY Index (NIFTY INDEX) in September.
- Passive NIFTY Index trackers will need to trade at least 3.3x ADV and 7.7x delivery volume on the stocks. There is some opposite flow from Nifty Next 50 Index trackers.
- Cumulative excess volume has increased in all stocks but there are some stocks where there will still be more positioning over the next few weeks.
Block Deal Sale of Kumho Tire: More Shares Likely to Be Sold by Creditors
- Woori Bank completed a block deal sale of 11 million shares of Kumho Tire Co (073240 KS) (3.83% of outstanding shares) on 18 July.
- After the recent sales by Woori Bank and the Export-Import Bank of Korea, the creditors’ stakes in Kumho Tire has been reduced to 19.17%.
- Despite Kumho Tire’s recent improvement in financial performance, we are more concerned about the additional stake sale by the financial institutions that still own 19.2% stake in the company.
China A50 ETFs Rebalance Preview: Two Changes in September
- Based on the close of 22 July, there could be two changes for the iShares A50 China (2823 HK) / CSOP China A50 (2822 HK) ETFs in June.
- China National Nuclear Power and Huaneng Lancang River Hydropower could replace China Tourism Group Duty Free Corp Ltd and Yihai Kerry Arawana Holdings in the ETFs.
- China Tourism Group Duty Free (1880 HK) could be deleted from a global index in August, so there could be selling in the A-shares and H-shares.
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