In today’s briefing:
- SBI (8473) Buys Back Into ARUHI (7198) In Partial Tender Offer
- Genting Fancies A Flutter In Macau
- SAIC’s Unconditional Offer For Dongzheng Now Open
- KOSDAQ 150 Early Entry Candidates for December Rebalancing
- S.M.Entertainment – Chairman Lee Soo Man to End Contract with Like Planning (A Big Catalyst!)
- Dongzheng’s Unconditional MGO at HK$1.2430 Opens
- EQD | HSI (HSI Index): Use Derivatives to Play Tactical Long and Relative Value Vol Trade Vs SPX
- TIGER Battery ETF (WISE) Rebalancing in October
SBI (8473) Buys Back Into ARUHI (7198) In Partial Tender Offer
- Yesterday, SBI Holdings (8473 JP) announced it would launch a tender offer to buy 33.4-51% of Aruhi Corp (7198 JP) at ¥1,500/share – a 48.5% premium to the close.
- ARUHI – Japan’s largest “mortgage bank” – was listed in late 2017. Long ago, its predecessor was named SBI Mortgage. This is SBI buying back in.
- Inside we look at valuations, shareholder structure, pro-ration. There are opportunities here.
Genting Fancies A Flutter In Macau
- In a surprise move, Genting Bhd (GENT MK) – or Genting Malaysia (GENM MK) – has joined the six incumbents in bidding for new casino licences in Macau.
- The bidding process follows Macau’s record low monthly gaming revenue in July after casinos were closed for 12 days in response to a Covid outbreak.
- Casinos have re-opened, yet there is little to cheer about as business remains muted. The six winners are expected to be announced by the end of November or early December.
SAIC’s Unconditional Offer For Dongzheng Now Open
- Back on the 19 May, SAIC (600104 CH) acquired China Zhengtong Auto Services (1728 HK)‘s 71.04% stake in Dongzheng Automotive Finance (2718 HK) at a judicial auction. This triggered the mandatory Offer.
- SAIC confirmed a possible unconditional mandatory cash Offer for Dongzheng on the 26 May.
- The Composite Doc has now been dispatched. The Offer is open for tendering and closes on the 16 October
KOSDAQ 150 Early Entry Candidates for December Rebalancing
- HPSP (403870 KS) and Sungeel Hitech (365340 KS) are the candidates for Early Entry in the December rebalancing as they sit comfortably within the Early Entry zone.
- Rsupport (131370 KS) and Kona I (052400 KS) are safe deletion bets. If they are not deleted through the rebalancing process, they will most likely be excluded by Early Entry.
- HPSP and SungEel should see an inflow equivalent to 0.9x and 0.8x ADTVs, respectively. Rsupport and Kona I will likely suffer an outflow of 3.4x and 3.8x ADTVs, respectively.
S.M.Entertainment – Chairman Lee Soo Man to End Contract with Like Planning (A Big Catalyst!)
- After the market close today, S.M.Entertainment announced that its Chairman Lee Soo Man will end the contract with Like Planning, a contents producing company owned by Lee Soo Man.
- We estimate that S.M.Entertainment has paid more than 160 billion won to Like Planning in the past 10 years.
- By ending the relationship between Chairman Lee Soo Man and Like Planning, this should have a major positive impact on S.M.Entertainment shares in the coming weeks.
Dongzheng’s Unconditional MGO at HK$1.2430 Opens
- Dongzheng Automotive Finance (2718 HK)‘s composite document is out with the offer open from 15 September to 6 October. The IFA considers the offer to be fair and reasonable.
- SAIC Motor (600104 CH), which acquired a 71.04% stake, has launched an unconditional MGO at HK$1.2430 per H Share. SAIC intends to maintain Dongzheng’s listing status.
- At the last close and the 17 October payment, the gross and annualised spread to the MGO price is 1.1% and 13.3%, respectively.
EQD | HSI (HSI Index): Use Derivatives to Play Tactical Long and Relative Value Vol Trade Vs SPX
- HSI INDEX is trading back down to recent lows and support levels. It looks oversold and there are potential catalysts for a bounce
- Implied vols are low and options offer a great way to play a tactical long
- We highlight a relative value vol trade vs the SPX
TIGER Battery ETF (WISE) Rebalancing in October
- The rebalancing trading will be at the close on October 13. The AUM currently amounts to ₩1.32T with 28 constituents, implying that the passive impacts wouldn’t be insignificant.
- It will likely show a similar pattern to the last rebalancing. With no constituent change, weight adjustment by 10% cap of top stocks leads to weight adjustment of the rest.
- An important variable here is the entry of newly listed stocks. SungEel Hitech and Sebitchem, the two larger cap stocks, appear to have a reasonably high inclusion probability.
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