In today’s briefing:
- Mar24 Nikkei 225 Rebal – Socionext, Disco, Zozo IN; US$4bn One-Way; More Impactful Than It Looks
- Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
- JSR Corporation (4185 JP): Something Is Brewing, but Nobody Knows Quite What
- Genex (GNX AU): J-Power’s Indicative Offer
- TDCX (TDCX US)’s $7.20/Share Short-Form Merger
- May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials
- Ecopro Materials: Potential Selling by Second Largest Shareholder Post End of Lockup Period in May
- Genex Power (GNX AU): J-Power’s Dual-Track Non-Binding Proposal
- Vinda International (3331 HK): Pre-Condition Satisfied
- NIFTY100 Low Volatility 30 Index Rebalance Preview: Titan Could Replace IOCL
Mar24 Nikkei 225 Rebal – Socionext, Disco, Zozo IN; US$4bn One-Way; More Impactful Than It Looks
- The changes to the Nikkei 225 Average for the March 2024 Review were announced today after the close. A little earlier than I expected.
- Socionext, Disco, Zozo IN; Takara Hldgs, Sumi Osaka Cement, Pacific Metals OUT. Nitori PAF increase. US$4bn+ to trade one way on 29Mar close. One interesting surprise.
- Overall more impactful than it looks. And it changes the front-end arithmetic on Fast Retailing (9983 JP). There may be fun on the DELETEs.
Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
- DISCO (6146 JP), Socionext (6526 JP) and ZOZO (3092 JP) will replace Takara Holdings (2531 JP), Sumitomo Osaka Cement (5232 JP) and Pacific Metals (5541 JP) in the Nikkei 225.
- Nitori Holdings (9843 JP)‘s PAF will increase from 0.3 to 0.5, and surprisingly there is no PAF adjustment for ZOZO Inc (3092 JP).
- Passive trackers need to buy between 1-18 days of ADV on the adds while selling between 2.7-28 days of ADV on the deletes. There is a big funding trade too.
JSR Corporation (4185 JP): Something Is Brewing, but Nobody Knows Quite What
- JSR Corp (4185 JP)’s shares rose 4.8% due to a Nikkan Kogyo article that states that JIC will start the tender within the month due to concluding negotiations with SAMR.
- Caution is warranted as JSR has not provided a customary timeline update, no confirmatory disclosure from SAMR and JSR’s response to SUNY RF’s claims are yet to be filed.
- Based on current information, there are five possible tender scenarios. In the worst case, the downside risk on a deal break should be muted due to the market re-rating.
Genex (GNX AU): J-Power’s Indicative Offer
- Back in July 2022, Aussie renewable energy player Genex (GNX AU) announced an A$0.23/share NBIO from Skip Enterprises and Stonepeak, subsequently bumped to A$0.25/share, and confirmatory due diligence provided.
- Negotiations ceased in December that year. As of today, Scott Farquhar’s Skip Enterprises continues to hold a 19.9% stake in Genex.
- This morning, Genex announced an A$0.275/share NBIO from Electric Power Development (9513 JP) (J-Power), by way of a Scheme. A concurrent off-market A$0.27/share is in place.
TDCX (TDCX US)’s $7.20/Share Short-Form Merger
- On the 2 January, TDCX (TDCX US), a Singapore-headquartered digital customer experience (CX) provider, announced it had received a preliminary non-binding proposal from Laurent Junique to be acquired at $6.60/ADS.
- On the 1st March, TDCX entered in a definitive agreement by way of a short form merger at US$7.20/ADS, a 48% premium to undisturbed.
- As Laurent Junique holds 98.4% of the voting power, there is no shareholder vote on the merger. This is done. The Offer should close in the 2Q24.
May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials
- May 17th, all eyes on EcoPro Materials for a buzzed-about lockup release. BRV Capital holds 24.5% stake, 17M shares. Lockup ends May 16th; they’re free to sell off without constraints.
- Apparently, they’re eager to cash out, with a profit margin around 30 times and 7 years invested. Many at Yeouido bet they’ll sell out once the lockup’s over.
- We might start building a shorting position with futures targeting this lockup release from April 22nd. This could stir up some weird backwardation, which could give us another trading opportunity.
Ecopro Materials: Potential Selling by Second Largest Shareholder Post End of Lockup Period in May
- We discuss the strong likelihood of potential selling of EcoPro Materials by BRV Capital Management (the second largest shareholder of Ecopro Materials with a 24.7% stake) in May 2024.
- BRV Capital Management’s stake in Ecopro Materials is currently worth 3.1 trillion won. In the past seven years, BRV Capital Management has invested about 93 billion won in Ecopro Materials.
- On 4 March, Ecopro Materials announced it has entered into a contract to supply precursor to a U.S. auto company. There is some local speculation that this could be Tesla.
Genex Power (GNX AU): J-Power’s Dual-Track Non-Binding Proposal
- Genex Power Ltd (GNX AU) has disclosed a non-binding scheme proposal from Electric Power Development C (9513 JP) at A$0.275, a 48.6% premium to the undisturbed price of A$0.185.
- If the scheme fails, J-Power will launch an off-market takeover offer with a 50.1% minimum acceptance condition at A$0.270 per share. The dual-track bid is meant to counter Skip’s stake.
- The Board has granted exclusive due diligence until 31 March. The offer is attractive, but the scheme’s completion hinges on Skip Capital’s acceptance.
Vinda International (3331 HK): Pre-Condition Satisfied
- Vinda International (3331 HK) has announced the pre-condition for Sukanto Tanoto’s HK$23.50 voluntary offer is satisfied. The composite document will be despatched on or before 11 March.
- The offeror has received irrevocables from Essity (ESSITYB SS) and Mr Li, representing 72.62% of outstanding shares, which satisfies the 50% minimum acceptance condition.
- Including irrevocables, the offeror currently represents 80.31% of outstanding shares. The offeror intends to exercise compulsory acquisition rights. The tight 0.4% gross spread reflects a done deal.
NIFTY100 Low Volatility 30 Index Rebalance Preview: Titan Could Replace IOCL
- With the review period complete, Titan Co Ltd (TTAN IN) should replace Indian Oil Corp (IOCL IN) in the Nifty100 Low Volatility 30 Index at the close on 27 March.
- Constituent changes, volatility changes and capping changes will result in one-way turnover of 13.2% resulting in a one-way trade of INR 4.2bn.
- The flows on the stocks are not very large but there will be same side and offsetting flows from other index trackers at the same time.
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