In today’s briefing:
- Merger Arb Mondays (29 Jul) – China TCM, Canvest, CPMC, GA Pack, Tohokushinsha, Furukawa, Tatsuta
- ENEOS Bumps Tatsuta Elec (5809) Bid – 8.3% Bump Matches 8.7% Rise in BVPS Since Announcement
- STAR50 Index Rebalance Preview: Positioning Indicates Further Gains for a Long/Short Trade
- Ansarada (AND AU)’s Scheme Is Back On Track
- NIFTY NEXT50 Index Rebalance Preview: 7 Changes as Non-F&O Stocks Replace F&O Members
- A8 Media (800 HK): 23rd August Shareholder Vote
- Mainland Connect NORTHBOUND Flows (To 19 July 2024): A Big Broad Sell in Third Plenum Week
- S&P 500 / S&P 1500: Exclusion by Earnings
Merger Arb Mondays (29 Jul) – China TCM, Canvest, CPMC, GA Pack, Tohokushinsha, Furukawa, Tatsuta
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), China Traditional Chinese Medicine (570 HK), Canvest Environmental Protection Group (1381 HK), Greatview Aseptic Packaging (468 HK), Asia Cement China (743 HK).
- Lowest spreads: Fancl Corp (4921 JP), Mimasu Semiconductor Industry (8155 JP), Infocom Corp (4348 JP), L’Occitane (973 HK), Qantm Intellectual Property (QIP AU), Alps Logistics (9055 JP).
ENEOS Bumps Tatsuta Elec (5809) Bid – 8.3% Bump Matches 8.7% Rise in BVPS Since Announcement
- Several weeks ago, ENEOS Holdings (5020 JP) launched its long-delayed Tender Offer for Tatsuta Electric Wire & Cable (5809 JP) with no bump despite the time value of money.
- It said the price reflected Tatsuta’s value sufficiently. A week ago on the 19th, ENEOS extended the Tender Offer, likely because they didn’t have the shares. Price was still “sufficient.”
- I suggested it might not be; I didn’t expect a big bump, but caveated earnings. Friday produced great Q1 earnings, and a bump from ¥720/share to ¥780/share.
STAR50 Index Rebalance Preview: Positioning Indicates Further Gains for a Long/Short Trade
- There are only 3 trading days left in the review period for the September rebalance of the SSE STAR50 (STAR50 INDEX).
- We see two potential changes that could result in a one-way turnover of 3.6% and in a one-way trade of CNY 4.7bn (US$644m).
- Cumulative excess volume has started to pick up in the stocks over the last few weeks and that could be an indicator of further gains for a long/short trade.
Ansarada (AND AU)’s Scheme Is Back On Track
- Datasite’s A$2.50/share, in cash, lifetime-high Offer for virtual room provider Ansarada Group Ltd (AND AU), announced on the 13th Feb, appeared a total slam dunk.
- And for the most part it was, with the Explanatory Doc lodged on the 12th April, and Scheme Meeting initially scheduled for the 14th June. Then the ACCC waded in.
- The ACCC has now signed off. FIRB will follow shortly. The revised Scheme Meeting will be held on the 19 August, with expected implementation on the 6 September.
NIFTY NEXT50 Index Rebalance Preview: 7 Changes as Non-F&O Stocks Replace F&O Members
- With 3 trading days left in the review period, there could be 7 changes (including 2 migrations) for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September.
- Estimated one-way turnover is 18% resulting in a one-way trade of INR 55bn (US$660m). 9 stocks will have over 1x ADV to trade from passive trackers.
- All the deletes are F&O members while most adds are not. NSE Indices may have to revisit the index membership criteria especially given the launch of futures on the index.
A8 Media (800 HK): 23rd August Shareholder Vote
- Back on the 12th June, PRC property rental play A8 New Media (800 HK) announced an Offer by way of a Scheme from chairman/founder/major shareholder Liu Xiaosong.
- The Cancellation price was $0.36/share, a punchy 162.77% to last close. The price was declared final.
- The Scheme Doc is now out, with an independent shareholder vote on the 23 August and payment on or around the 2nd October. This is a done deal.
Mainland Connect NORTHBOUND Flows (To 19 July 2024): A Big Broad Sell in Third Plenum Week
- The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
- Last week saw NORTHBOUND net SELL RMB 11.4bn of A-shares. NORTHBOUND sold everything. Seemed somewhat cap-weighted. Not a pretty flow picture.
- A-Shares sharply underperformed HK indices, but AH spreads didn’t recover the prior week’s disaster. That said, there WAS dip-buying this week on the worst hit, which is unusual recently.
S&P 500 / S&P 1500: Exclusion by Earnings
- The ‘Financial Viability’ (GAAP earnings) criterion is the main obstacle that keeps companies out of the S&P 500 and overall S&P 1500.
- Uber Technologies (UBER US) and Crowdstrike Holdings (CRWD US) are past examples of companies that got added to S&P 500 after passing the GAAP Earnings criterion.
- Marvell Technology (MRVL US) and Snowflake (SNOW US) are currently ineligible for S&P 500 inclusion due to failing the GAAP Earnings eligibility requirement.
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