In today’s briefing:
- StubWorld: Toyota Group To Sell 10% of Denso; Adelson Selling LVS
- Spread Trade Opportunities Arising from KQ150/KS200 Passive Flows in the Celltrion Merger
- SK Square: Drag Along Rights To Be Exercised to Sell 11 Street + Merger of TVing and Wavve
- Japan – A Last Look at Shorts on Some Interesting Stocks & Positioning
- Quiddity JPX-Nikkei 400 Rebal 2024: End-Nov 2023
- Naspers (NPN SJ), Prosus (PRX NA) H1 FY24 Results, Key Takeaways
- Tata Consultancy Services Buyback: Tender Offer Period Opens on 1st Dec
- Taking off from Heathrow
StubWorld: Toyota Group To Sell 10% of Denso; Adelson Selling LVS
- The Toyota Group of companies are proposing to reduce their holdings in Denso (6902 JP) by selling about 10% by year-end, in a share sale worth ~$4.7bn.
- Preceding my comments on Toyota Industries (6201 JP) / Toyota Motor (7203 JP) – and Las Vegas Sands (LVS US) – are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Spread Trade Opportunities Arising from KQ150/KS200 Passive Flows in the Celltrion Merger
- KOSDAQ 150’s passive outflow occurs on December 14th for Celltrion Healthcare, whereas it would be January 11th for Celltrion with KOSPI 200.
- The estimated passive flow size (x ADTV) on their respective rebalancing trading days is anticipated to be approximately -2.79x (Celltrion Healthcare) and +1.76x (Celltrion).
- We should monitor the potential expansion of the swap spread on December 14th. Additionally, contemplating an outright approach for Celltrion, akin to the Hanwha Ocean scenario, could be worth considering.
SK Square: Drag Along Rights To Be Exercised to Sell 11 Street + Merger of TVing and Wavve
- SK Square announced it will not exercise the call option to repurchase minority stake in 11 Street. This is likely to have a positive impact on the company.
- SK Square does not need to pay 500 billion won plus 3.5% annualized interest to the financial investors of 11 Street. This will also accelerate sale of 11 Street.
- In addition, SK Square announced the merger of TVing and Wavve OTT services.
Japan – A Last Look at Shorts on Some Interesting Stocks & Positioning
- There should be liquidity events on Persol Holdings, Hakuhodo Dy Holdings, Welcia Holdings, GMO Payment Gateway, CyberAgent, Kobayashi Pharmaceutical, NGK Insulators, Lixil Group, Kurita Water Industries and Keio Corp tomorrow.
- On average, the stocks have underperformed the Nikkei 225 Index over the last 2-3 months but there has been near-term outperformance.
- There has been a big increase in shorts on the stocks over the last couple of months and positioning varies across stocks.
Quiddity JPX-Nikkei 400 Rebal 2024: End-Nov 2023
- JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the rankings of the potential ADDs/DELs every month.
- Below is a look at potential ADDs/DELs for the JPX-Nikkei 400 Index Rebal to come in August 2024 based on trading data as of end-November 2023.
Naspers (NPN SJ), Prosus (PRX NA) H1 FY24 Results, Key Takeaways
- Improved transparency from management is an important positive. Additional disclosures were included on entity IRR in the results presentation (attached, not previously disclosed).
- Profitability target for the consolidated ecommerce businesses moved forward to H2 FY24 from H1 FY25. Significant narrowing of trading losses in H1 FY24 to $36m from $256m in H1 FY23.
- As management ‘commit to highlight value where and when possible’, we think an IPO could very well be on the horizon.
Tata Consultancy Services Buyback: Tender Offer Period Opens on 1st Dec
- Tata Consultancy Svcs (TCS IN) launched an INR170bn (US$2bn) Buyback in mid-November 2023 which is one of the largest Buybacks in India in recent years.
- The company has published the Letter of Offer confirming the final details and the expected timeline for this Buyback.
- Below is a closer look at these details and their implications for shareholders.
Taking off from Heathrow
- Ferrovial Sa (FER SM) announces the sale of its 25% stake in Heathrow Airport Holdings for £2,368 million (valued at zero in its books), far exceeding my valuation of €1,617 million.
- With the operation, Ferrovial will be able to invest in more lucrative new infrastructure projects than Heathrow (a mature asset). Ferrovial is focused on growth in North American greenfield projects.
- The divestment should have a positive impact of 4.7% on Ferrovial’s consensus target price, which increases to €34.55/share vs. €33/share previously, which implies a revaluation potential of 9.5%.
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