In today’s briefing:
- Nidec (6594) Goes Hostile On Takisawa Machine Tool (6121) – I’ve Got 🍿🍿
- Seizing Shorting Opportunities on Krafton as ARM Seeks Anchor Investors
- Keisei Electric: Valuation Distortion Set to Unravel with Fantasy Springs’ Opening in Spring 2024
- Quiddity Leaderboard F100/250 Sep 23: Two F100 Change and Three F250 Changes Likely
- Quiddity Leaderboard-DAX Sep 23: SHORT Sartorius LONG Merck Trade STILL Interesting
- Inflexion/DWF: Compelling Value
Nidec (6594) Goes Hostile On Takisawa Machine Tool (6121) – I’ve Got 🍿🍿
- Last year Nidec Corp (6594 JP) approached machine tool maker Takisawa Machine Tool (6121 JP) interested in an integration with their sub. Takisawa said “Talk to the hand.”
- Now Nidec – a blue chip (from Kyoto no less, which traditionally abhors hostile activity) – has gone hostile on Takisawa bidding 65-100% depending how you see undisturbed.
- Lots of moving parts on this one, but in the end, Retail probably decides this.
Seizing Shorting Opportunities on Krafton as ARM Seeks Anchor Investors
- One noteworthy aspect is SK Square’s strategic move towards gradually shifting its investment portfolio from platform businesses to companies within the semiconductor supply chain.
- Given SK’s aim to acquire a 1-2% stake as an anchor investor in ARM, selling the Krafton stake is necessary to secure sufficient funds for the potential ARM investment.
- We may consider positioning to capitalize on SK Square’s potential block deal for its Krafton stake, aligning with the schedule for selecting anchor investors in August for the ARM listing.
Keisei Electric: Valuation Distortion Set to Unravel with Fantasy Springs’ Opening in Spring 2024
- Since the announcement of the proposed Tokyo Disney Sea expansion in 2015, Keisei Electric Railway Co (9009 JP)‘s price perfromance has significantly diverged from Oriental Land (4661 JP)‘s price performance.
- The valuation disparity may result from the Disney Sea expansion’s impact, possibly due to Keisei Electric’s value-oriented investor base.
- Fantasy Springs’ opening could resolve the valuation distortion, leading to potential rewards in a Long Keisei Electric and Short Oriental Land trade.
Quiddity Leaderboard F100/250 Sep 23: Two F100 Change and Three F250 Changes Likely
- In this insight, we take a look at the potential index changes for F100 and F250 in the run up to the September 2023 Rebalance.
- I currently expect two changes for the F100 index and three changes for the F250 index.
- As always, there are several names lurking just outside the borders and could be involved in index changes in September 2023 if there are sharp price changes.
Quiddity Leaderboard-DAX Sep 23: SHORT Sartorius LONG Merck Trade STILL Interesting
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the DAX, MDAX, and SDAX Indices in the September 2023 Rebalance.
- As things stand, I do not see any changes for the DAX index as-is, but there are couple of names requiring only small price gains to trigger Fast Entry changes.
- I see one change between MDAX and SDAX and one separate ADD/DEL for the SDAX index in the September 2023 rebalance.
Inflexion/DWF: Compelling Value
- DWF Group (DWF LN) is discussing with Inflexion regarding a 100p/share offer (£342 million implied equity value, 53% premium, 8.2x Fwd P/E, but 18% discount to IPO price). PUSU is 7 August.
- Spread to the offer price is 16.2%. The market is pricing a 53% chance to complete the deal, which seems low. Poor cash generation and leverage are already known.
- The shares trade at 6.7x Fwd P/E, 7.6% dividend yield and 18.6% FCF yield (IBES estimates). Considering that management has said it would recommend the offer, my TP is 100p.
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