Daily BriefsEvent-Driven

Daily Brief Event-Driven: Outsourcing (2427 JP) – Earnings Out and more

In today’s briefing:

  • Outsourcing (2427 JP) – Earnings Out, With a Bigger Impairment, But Not Clearly A MAC
  • Outsourcing (2427 JP): The Weak 4Q Unlikely to Deter Bain
  • Seven Group Reloads On Boral (BLD AU)
  • Yuanta/​P-Shares Taiwan Div+ ETF Rebalance Preview: One Deletion & Capping Changes
  • Offshore China ETFs Rebalance Preview: Big Price Moves Could Lead to Four Changes
  • FXI Rebalance Preview: Three Potential Changes as Big Moves Unfold
  • APM Human Services (APM AU) Rejects CVC’s NBIO
  • Quiddity Leaderboard TDIV Mar 24: 8 Days to Sell in Bizlink
  • Quiddity Leaderboard T50/​​​100 Mar 24: Bizlink TDIV DEL; Foxtron’s Futile Rally; One More Surprise
  • Taiwan Top 50 ETF Rebalance Preview: Alchip (3661) Could Replace Feng Tay (9910)


Outsourcing (2427 JP) – Earnings Out, With a Bigger Impairment, But Not Clearly A MAC

By Travis Lundy

  • Outsourcing Inc (2427 JP) delayed its earnings from 14 February to 19 February on tardiness in calculating impairment losses. That caused a short sharp shock in share price.
  • An article came out suggesting it was a small number, and domestic biz EAS-related. Results today do not suggest EAS-related, and half is overseas. But no suggestion of precondition breach.
  • For that, I think this probably goes through, and the EC FSR review period should end on 20 Feb so a deal announcement by Friday is eminently possible.

Outsourcing (2427 JP): The Weak 4Q Unlikely to Deter Bain

By Arun George

  • Outsourcing Inc (2427 JP) has disclosed a weak 4Q materially below guidance due to cost overruns and JPY6,875 million in impairments. The results did not provide an update on Bain’s tender.
  • The weak 4Q has raised concerns that Bain would reconsider terms. Our take is that the results will not warrant a change in the DCF valuation or breach a pre-condition. 
  • Bain is likely to consider the results a reflection of near-term industry weakness rather than company-specific issues. The annualised spread for a March-end completion is 9.8%.

Seven Group Reloads On Boral (BLD AU)

By David Blennerhassett

  • After Boral (BLD AU) rejected Seven Group (SVW AU)‘s $6.50/share Offer in 9 June 2021, Seven bumped to $7.30 cash if they got to 29.5%, and $7.40 if 34.5%.
  • Seven reached 29.5% by July 1, 34.5% less than a week later, then 52.65% on the 15 July, and at the close of the Offer (29 July 2021), held 69.6%.  
  • Seven, now holding 71.6%, has made a cash/scrip Offer for shares not owned, with certain tendering thresholds triggering more cash. Terms are best & final.

Yuanta/​P-Shares Taiwan Div+ ETF Rebalance Preview: One Deletion & Capping Changes

By Brian Freitas

  • Bizlink Holding (3665 TT) should be deleted from the Yuanta/​P-Shares Taiwan Dividend Plus ETF in March and that will trigger selling of over 8 days of ADV.
  • There will be capping and funding flows due to the higher AUM and passive trackers will need to trade over 0.4x ADV in 5 stocks.
  • Shorts have covered positions in Bizlink Holding (3665 TT) but there has been a recent uptick that could be linked to positioning for the rebalance.


FXI Rebalance Preview: Three Potential Changes as Big Moves Unfold

By Brian Freitas


APM Human Services (APM AU) Rejects CVC’s NBIO

By David Blennerhassett

  • Employment and disability services play APM Human Services (APM AU) has rejected PE-outfit CVC Asia Pacific’s proposal, which valued APM at less than half of its November 2021 IPO price.
  • APM confirmed it had received – on Friday, 16 February – a conditional and non-binding A$1.60/share indicative proposal. That’s a 93% premium to undisturbed. Yet, APM’s IPO Price was A$3.55/share.
  • CVC – and other suitors – need to persuade executive chair and founder Megan Wynne and US private equity group Madison Dearborn, who collectively control ~65% of the company.

Quiddity Leaderboard TDIV Mar 24: 8 Days to Sell in Bizlink

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at Quiddity’s flow expectations for the March 2024 index rebal event.
  • Today is the base date for the March 2024 index rebalance. Based on the closing prices today, I expect one DEL for the TDIV index in March 2024.
  • Separately, I also expect the AUM assumption to be revised in March 2024.

Quiddity Leaderboard T50/​​​100 Mar 24: Bizlink TDIV DEL; Foxtron’s Futile Rally; One More Surprise

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the March 2024 index rebal event.
  • I expect one change for the T50 index and two other changes for the T100 index.
  • The two T100 expected DELs are special because one could be a surprise deletion due to liquidity test failure and the other one is TDIV member with significant flow implications.

Taiwan Top 50 ETF Rebalance Preview: Alchip (3661) Could Replace Feng Tay (9910)

By Brian Freitas


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