In today’s briefing:
- Softbank Confirms BABA Selldown – Big Changes on Softie’s Balance Sheet and BABA Index Implications
- FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: BIG Capping Changes in September
- Shinoken (8909) MBO – Decent Premium, Still Light, Will Someone Push?
- Looking at Canon Buyback Dynamics History – Patterns Vs Peers Gives Execution Hints
- Kakao Games: Announces A Rights Offering Worth 197 Billion Won
- Hong Kong CEO & Director Dealings – 10th August 2022
- STI Index Rebalance Preview (Sep): Close to the Cutoffs
- True/DTAC: Merger Support Increasingly Tenuous
- Siemens Energy/Siemens Gamesa: Downwards Guidance
Softbank Confirms BABA Selldown – Big Changes on Softie’s Balance Sheet and BABA Index Implications
- Softbank today confirmed that the stories circulating about Softbank having hedged a decent portion – 200+mm shares – of its BABA position were true.
- The market expectation had been that these pre-paid forwards would be held for another two years. The announcement today is that they will be physically settled early.
- This means the entire accounting effect – worth ¥4.6trln – will hit the income statement (and balance sheet) in the current quarter. There are investment and index implications
FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: BIG Capping Changes in September
- We do not expect any deletions from the FTSE TWSE Taiwan Dividend+ Index in September, but there will be a lot of passive flow due to capping changes.
- Based on the closing prices from 9 August, we estimate one-way turnover of 11.2% at the September rebalance resulting in a one-way trade of TWD 15,754m (US$525m).
- Most stocks with expected passive inflows are trading near their recent lows (leading to higher dividend yield), while most stocks with expected passive outflows have rallied recently (lower dividend yields).
Shinoken (8909) MBO – Decent Premium, Still Light, Will Someone Push?
- Today Shinoken Group (8909 JP) announced it was the subject of an MBO where the CEO-founder invited Integral – a local PE fund – to help him restructure and grow.
- It is at a 45% premium to last, and management negotiated the price from a relatively insulting initial bid of ¥1,300 to ¥1,600 in the end, but it’s still light.
- It is not hugely light, but it is not a full price. It could definitely be a bit higher. The question is whether active foreigners will push.
Looking at Canon Buyback Dynamics History – Patterns Vs Peers Gives Execution Hints
- Canon Inc (7751 JP) has just started its 17th buyback in 15 years. Like the 16 before, this one is for ¥50bn.
- The patterns/dynamics of the canon buybacks in the past are remarkable when compared to buybacks of other companies.
- There are outperformance and under-performance patterns vs Peers, and it is worth taking note if you have a position to trade.
Kakao Games: Announces A Rights Offering Worth 197 Billion Won
- Kakao Games Corp (293490 KS) announced today a rights offering worth 197 billion won, representing 4.4% of its market cap.
- Lionheart Studio’s founder and CEO Kim Jae-Young is expected to purchase 3.1 million shares of the rights offering (177 billion won), representing 90% of the total rights offering shares.
- The issue with Kakao Games and Lionheart Studio remains the fact that many investors would rather invest in Lionheart when it completes its IPO, rather than indirectly through Kakao Games.
Hong Kong CEO & Director Dealings – 10th August 2022
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
- These insights also flag those companies where shares have been pledged, both recently and ongoing.
STI Index Rebalance Preview (Sep): Close to the Cutoffs
- Emperador (EMI SP) currently is just outside the inclusion zone for the FTSE Straits Times Index (STI) (STI INDEX) and a small price bump is needed for index inclusion.
- If Emperador (EMI SP) is added to the index, Comfortdelgro Corp (CD SP) could be deleted as the lowest ranked index constituent.
- Emperador (EMP PM) is a high probability inclusion to the FTSE All-World Index at the September SAIR and the stock could move higher over the next couple of weeks.
True/DTAC: Merger Support Increasingly Tenuous
- Reportedly, the board of the National Broadcasting and Telecommunications Commission (NBTC), Thailand’s telco regulator, has called for a more detailed analysis of the deal’s impact on competition, consumers and industry.
- This follows recent calls by Thailand’s opposition Move Forward party urging the NBTC to block Total Access Communication (DTAC TB) / True Corp Pcl (TRUE TB)‘s merger.
- Both DTAC and True are trading tight to terms – especially True. Time to take down borrow.
Siemens Energy/Siemens Gamesa: Downwards Guidance
- Q3 2022 results were received as weak by the market. Guidance was (again) revised downwards. Otherwise, the takeover bid continues in the process of authorization by the CNMV.
- I don’t expect any relevant changes in the offer: Siemens Energy already has control, operating problems persist and the financial position continues to deteriorate. Downwards risks to consensus estimates persist.
- Gross spread is 0.33%. The estimated annual return is 1.63% (assuming settlement on 24 October). Sell on strength/tender during the offer in case there’s a (low probability) improvement in the offer.
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