In today’s briefing:
- Sony To Buy 7+% Stake in Kadokawa (9468 JP) For ¥50bn, Ending Near-Term Hopes of Takeover
- SET50 Index Rebalance: Four Changes; Cal Comp🚀
- Henlius (2696 HK): This Should Trade Tighter. Get Involved
- MPHB Capital (MPHB MK)’s Offer: Almost There As ISM Exhausts Options
- LY Corp (4689) Announces Takeover of Beenos (3328) – Lightish at ¥4,000 But A Done Deal
- Quiddity Leaderboard CSI 300/500 Jun 25: ~US$5.9bn Collective One-Way Flows
- Korea FSC’s Stabilization Fund: Breaking Down the Buzz and Flow Impact
- Quiddity Leaderboard STAR 50/100 Mar25: Multiple Changes, Large Flows; High-Impact Trade Idea
- CPMC (906 HK): Tendering Now Open
- LS Electric, Then Hyundai Rotem, Now Samyang Foods and Hyundai Mipo: Same Proactive Flow?
Sony To Buy 7+% Stake in Kadokawa (9468 JP) For ¥50bn, Ending Near-Term Hopes of Takeover
- Today, Kadokawa (9468 JP) announced it would sell ¥50bn of shares to Sony (6758 JP) in a 3rd Party Allotment to cement a Strategic/Capital Alliance. Sony will own 10% at ¥4,146/share.
- 40% of proceeds is to “create and develop new IP”, 60% is to “enhance global IP distribution”; both over 5yrs. Given ¥108bn of net cash/securities, this is a garbage reason.
- Kadokawa shares have gained 44% in a month since Reuters carried an “Exclusive” article saying Sony was in talks to acquire Kadokawa. This is defensive entrenchment. The result will disappoint.
SET50 Index Rebalance: Four Changes; Cal Comp🚀
- There will be 4 changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the close on 30 December.
- All changes are in line with our forecasts and there appears to be positioning in all the stocks.
- Cal Comp Electronics Thailand (CCET TB) will have the largest passive buying a percentage of free float and could be the stock to watch.
Henlius (2696 HK): This Should Trade Tighter. Get Involved
- After the China Traditional Chinese Medicine (570 HK) fiasco back in October, Hong Kong M&As have received some welcome Xmas cheer of late.
- Small-Cap CM Hi-Tech (2115 HK) secured reg approvals in record time. Then CPMC (906 HK)‘s pre-cons were satisfied on 13th December. Now Shanghai Henlius (2696 HK)‘s pre-cons are also fulfilled.
- Henlius’ spread narrowed after securing NDRC approval on the 22nd Nov; and again after fulfilling pre-cons this week. A 3.1% gross spread is okay. This is done. Get involved.
MPHB Capital (MPHB MK)’s Offer: Almost There As ISM Exhausts Options
- MPHB Capital (MPHB MK)‘s delisting Offer via a selective capital reduction (SCR) from controlling shareholder and chairman Tan Sri Surin Upatkoon appears to be in the home straight.
- The completion of the Offer has been delayed as ISM Sdn Bhd, MPHB’s minority partner in six JVs, invokes various legal options in an ongoing dispute.
- The High Court has now fixed 6 January 2025 as the hearing date for the SCR petition. Assuming that is granted, payment is likely mid-Feb.
LY Corp (4689) Announces Takeover of Beenos (3328) – Lightish at ¥4,000 But A Done Deal
- Early today, the Nikkei had an article saying LY (4689 JP) would launch a takeover of Beenos Inc (3328 JP). The stock went limit up. Shorts are many times ADV.
- Post-Close, we get a deal much as implied by the Nikkei article. It seems light to me but the top three holders have agreed to the deal.
- Regulatory will take a couple of months. This will likely fall tomorrow. If you are a long-only fund holder, think about the alternatives (read the conclusions here).
Quiddity Leaderboard CSI 300/500 Jun 25: ~US$5.9bn Collective One-Way Flows
- CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
- In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in June 2025.
- Currently, we see 6 ADDs/DELs for the CSI 300 index and 50 ADDs/DELs for the CSI 500 index.
Korea FSC’s Stabilization Fund: Breaking Down the Buzz and Flow Impact
- With the Fed shock pushing the won past 1,450 and the KOSPI down, it’s time to dig into the stabilization fund—its size, timing, and which stocks will catch the flow.
- With ₩10T in play, even spread over 10 stages, it could drive significant price impact. NPS’s ₩1.5T injection in December shows how even smaller flows move the market.
- The FSC plans to focus on KOSPI 200 and broad market ETFs, with new ETFs like the Value-Up Index likely getting more flow—target stocks in both for bigger impact.
Quiddity Leaderboard STAR 50/100 Mar25: Multiple Changes, Large Flows; High-Impact Trade Idea
- STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
- STAR 100 index tracks the next 100 names (51st-150th ranks) and it represents the mid-cap segment of the STAR market.
- In this insight, we look at the potential ADDs/DELs for the STAR50/STAR100 indices for the March 2025 index rebal event and suggest a high impact trade idea.
CPMC (906 HK): Tendering Now Open
- At a 1.5% gross spread to terms, CPMC Holdings (906 HK) is trading with completion is mind after the last pre-condition – SAFE – was satisfied on the 13th December.
- The Offer Doc is now out and the transaction is open for acceptances. The First Close is the 10th January.
- I’d expect this deal to turn unconditional on or before the First Close, with payment around the 20th January.
LS Electric, Then Hyundai Rotem, Now Samyang Foods and Hyundai Mipo: Same Proactive Flow?
- Local hedge funds, mainly prop traders and PEs, drove the price action in LS Electric and Hyundai Rotem, and are now leading net buying in Samyang Foods and Hyundai Mipo.
- Given the setup, it’s likely Samyang Foods and HD Hyundai Mipo will follow a similar move until mid-January when screening starts, so we should stay aware of this backdrop.
- This gives us a chance to capture upside. Plus, since Samyang Foods and Hyundai Mipo may pull back 30-40% post-screening, there’s also a solid opportunity during that dip.
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