In today’s briefing:
- Sep24 Nikkei 225 Rebal Final Predictions – Fastie Capped, Still 1 ADD, 1 DELETE, 1 Dark Horse and ?s
- True Wind Raises Partial Offer for Sun Corp Further, Leaving an Interesting Back End
- Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed
- Sun Corporation (6736 JP): Third’s Time a Charm for True Wind’s Final Offer
- Rio Tinto (RIO AU/LN): Thinking About The “Unification”
- KRX’s September Major Rebalancing Events: Why We Should Focus on KRX BBIG
- Quiddity Leaderboard SET50 Dec 24: 3 Changes Likely; INTUCH-GULF Merger Should Be Monitored
- End of Mandatory Lock-Up Periods for 41 Companies in Korea in August 2024
- Latest Update on Hanon Systems Stake Sale: Consider Long Short Setup on Hankook Tire & Hanon
- (Mostly) Asia M&A, July 2024: Canvest, Furukawa, Arvida, Advanced Info, Sermsuk, Thaicom
Sep24 Nikkei 225 Rebal Final Predictions – Fastie Capped, Still 1 ADD, 1 DELETE, 1 Dark Horse and ?s
- The Sep 2024 Nikkei 225 Review base date is here. As before, I see one ADD, one DELETE, one capping, and one Very Dark Horse.
- The rules are clear, but not. This causes confusion. There may be unwritten rules keeping the Very Dark Horse out til next time.
- The Nikkei Index Team announced Fast Retailing (9983 JP) would be capped. I didn’t expect that now. That means $2.2bn+ of selling 30Sep and a reverse funding trade.
True Wind Raises Partial Offer for Sun Corp Further, Leaving an Interesting Back End
- On 10 June, Sun Corp subsidiary Cellebrite DI (CLBT US)‘s SPAC sponsor True Wind Capital launched a Tender Offer for 19% of SunCorp at a premium but discount to NAV.
- The price was too low. CLBT shares rose. They lifted the TOB price by 8% to ¥4750. Still too low. It was trading there. Now they have lifted to ¥5500.
- Now a 49% premium to undisturbed, 29.4% premium to all-time high prior to the first tender. Changes in terms means this could get done. More bullish than it looks.
Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed
- The review period for the Nikkei 225 (NKY INDEX) September rebalance ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.
- Fast Retailing (9983 JP)‘s capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September.
- Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.
Sun Corporation (6736 JP): Third’s Time a Charm for True Wind’s Final Offer
- True Wind has increased its partial offer for Sun Corp (6736 JP) to JPY5,500 and materially lowered the minimum number of shares to be purchased from 3.3m to 1.1m.
- True Wind’s previous two offers were a non-starter due to an unattractive price and an onerous minimum acceptance threshold. The final offer addresses both these issues.
- The offer will succeed due to the low minimum acceptance threshold and the 25% price uplift vs. the 19% value increase in the Cellebrite stake (since the offer announcement).
Rio Tinto (RIO AU/LN): Thinking About The “Unification”
- Just shy of three years ago, BHP (BHP AU) announced the unification of its dual-headed corporate structure to make BHP “simpler and more agile”.
- Collapsing DLCs/share-classes was all the rage back then. The prior year, Unilever (UNA NA) collapsed its DLC; and Royal Dutch Shell unified its A and B lines in 2021.
- Rio (RIO AU/LN) is one of only a handful of remaining DLCs. Renewed investor calls to unwind the DLC and the recent UK’s listing regime reform necessitate a rethink.
KRX’s September Major Rebalancing Events: Why We Should Focus on KRX BBIG
- The KRX BBIG’s concentrated weight and top three replacements still attract significant flow trading interest despite a decline in AUM.
- In the Battery Sector, Posco Future M will replace Ecopro BM, while in the Bio Sector, Alteogen will replace SK Biopharmaceuticals.
- A significant single-day passive flow is expected, especially for SK Biopharm. Additionally, a day trading setup with Posco Future M and Ecopro BM will likely attract substantial interest.
Quiddity Leaderboard SET50 Dec 24: 3 Changes Likely; INTUCH-GULF Merger Should Be Monitored
- The SET50 index tracks the performance of the top 50 largest and most liquid names listed on the Stock Exchange of Thailand (SET).
- In this insight, we take a look at the potential ADDs/DELs for SET 50 during the index rebal event in December 2024.
- At present, we see 3 ADDs and 3 DELs but since the reference period is yet to start, the rankings can fluctuate significantly before the base date.
End of Mandatory Lock-Up Periods for 41 Companies in Korea in August 2024
- We discuss the end of the mandatory lock-up periods for 41 stocks in Korea in August 2024, among which 2 are in KOSPI and 39 are in KOSDAQ.
- These 41 stocks on average could be subject to further selling pressures in August and could underperform relative to the market.
- The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in August include APR, Fadu, and Kuk Il Paper.
Latest Update on Hanon Systems Stake Sale: Consider Long Short Setup on Hankook Tire & Hanon
- Today’s news indicates Hankook Tire found contingent liabilities in Hanon Systems’ finances, meeting conditions to break the May agreement and putting the deal on indefinite hold.
- Hankook Tire plans to adjust the new share price first, then the existing share price, while Hahn & Co, unable to delay its exit, will likely accept it.
- With Hahn & Co likely to accept Hankook Tire’s price adjustment request, consider a long-short setup: Hankook Tire may benefit from positive momentum, while Hanon Systems faces negative dilution.
(Mostly) Asia M&A, July 2024: Canvest, Furukawa, Arvida, Advanced Info, Sermsuk, Thaicom
- For the month of July 2024, 11 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$10bn.
- The average premium for the new transactions announced (or first discussed) in July was ~31%. The average premium YTD is ~44%.
- This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.
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