In today’s briefing:
- Toshiba (6502 JP) – Weak Sauce from JIP
- Jardine C&C (JCNC SP): Potential MSCI Inclusion as NAV Discount Shrinks
- KLine (9107) Buyback Redux-Squared – Post-Buyback Could Get Squeezy
- TIGER Top 10 Rebalancing: A Big Change Awaits
- TOPIX Inclusion: Socionext (6526 JP) – Momentum Is Fading, Exit Now.
- Jinke Smart (9666 HK) VGO Unconditional
- FSN E-Commerce (Nykaa) Lockup Expiry – US$2.5bn Unlock with a Very Scattered Shareholding
- Singtel Holds The Key To Gulf Energy’s Takeunder For Thaicom
- Delhivery: Potential Index Inclusions Overshadowed by US$2.89bn Lock-Up Expiry
- Eagle Cement: Offer Open. IFA Says Fair
Toshiba (6502 JP) – Weak Sauce from JIP
- Media reported last night that JIP would bid ¥2.2trln for Toshiba. That’s about ¥5,000-5,100/share.
- This morning, there is a bit more clarification. Funnily, that means there is less info here than people think.
- But it is not a great look for either JIP or Toshiba at this point.
Jardine C&C (JCNC SP): Potential MSCI Inclusion as NAV Discount Shrinks
- Jardine Cycle & Carriage (JCNC SP) was deleted from the SIMSCI Index in November 2020 and could be added back to the index at the upcoming SAIR.
- If added to the index, we estimate passive MSCI trackers will need to buy 7.9m shares (US$176m; 11 days of ADV) at the close on 30 November.
- Jardine Cycle & Carriage (JCNC SP) is trading at a tight discount to its listed holdings and the spread could widen post the MSCI implementation.
KLine (9107) Buyback Redux-Squared – Post-Buyback Could Get Squeezy
- Kawasaki Kisen Kaisha (9107 JP) had a shareholder return program in place in May. Earnings forecasts on 3 Nov were slightly disappointing so the stock sold off but…
- The large buyback allowed investors to try to game the situation. Some may have, but this morning on the execution, VERY few Real World Float holders sold.
- That leaves the stock squeezy going into a buyback to repurchase 20% of the Max Real World Float (including short-created longs).
TIGER Top 10 Rebalancing: A Big Change Awaits
- The two names in LONG (LG Energy Solution and Celltrion) and the two names in SHORT (Shinhan Financial and KB Financial) are almost a foregone conclusion.
- POSCO Holdings is now ahead of Kakao Corp due to the recent sharp rise in its share price. But the gap between them is still quite tight.
- This rebalancing will likely aggravate LG Energy’s flow crunch as it also awaits an MSCI up-weight (2x ADTV) in end-November and a KOSPI 200 up-weight (2x ADTV) on December 8.
TOPIX Inclusion: Socionext (6526 JP) – Momentum Is Fading, Exit Now.
- Japan-Based System-On-Chip designer and IP purveyor Socionext (6526 JP) was listed in the “Prime” section of the Tokyo Stock Exchange (TSE) on 12th October 2022.
- When a company gets listed in the Prime section, it subsequently gets included in the TOPIX Index requiring TOPIX-tracking funds to purchase the stock during an Inclusion Event.
- Usually, this presents interesting trading opportunities to generate sharp market-neutral returns in the space of few trading days. Below is a look at the details for Socionext’s TOPIX Inclusion Event.
Jinke Smart (9666 HK) VGO Unconditional
- Jinke Smart Services (9666 HK)’s VGO from Boyu Capital at HK$12.00 per share has been declared unconditional. Boyu has waived the 7.71% valid acceptances condition.
- Boyu has likely two aims for the unusual VGO – secure anti-trust approval and a re-rating by becoming the largest shareholder. Anti-trust approval was received on 8 November.
- Acceptances of 0.0081% of outstanding shares reflect the unattractive offer. The final closing date is 22 November. At the last close price, the spread to the offer is 2.7%.
FSN E-Commerce (Nykaa) Lockup Expiry – US$2.5bn Unlock with a Very Scattered Shareholding
- In Nov 2021, Nykaa raised around US$720m in its India IPO, via mostly selling secondary shares.
- Nykaa is a lifestyle focussed e-commerce platform and consumer brand offering a portfolio of beauty, personal care and fashion products, including its own branded products.
- In this note, we will talk about the upcoming lockup expiry.
Singtel Holds The Key To Gulf Energy’s Takeunder For Thaicom
- In April 2021, Gulf Energy (GULF TB)‘s surprising VTO for Intouch (INTUCH TB) was conditional, inter alia, on a waiver NOT to make a downstream offer for Thaicom (THCOM TB).
- Now Gulf has announced an intention to acquire Intouch’s 41.13% stake in Thaicom for Bt 9.92/share, a 19.3% discount last close, the completion of which triggers an MTO.
- The acquisition of shares from Intouch requires approval from Intouch shareholders. Gulf, with 46.44% of shares out, is required to abstain.
Delhivery: Potential Index Inclusions Overshadowed by US$2.89bn Lock-Up Expiry
- Delhivery (DELHIVER IN) raised US$675m in its IPO and started trading on 24 May. The stock dropped below its IPO price a couple of weeks ago.
- Lock-Ups on pre-IPO investors expire on 20 November with 598m shares (US$2.89bn) becoming available for sale. Sell before then or hold off on buying.
- Delhivery (DELHIVER IN) is a potential inclusion to the MSCI Small Cap and FTSE All-World indices in the next month. Passive buying will be overshadowed by lock-up expiry.
Eagle Cement: Offer Open. IFA Says Fair
- Back on the 5 October, San Miguel (SMC PM) announced the acquisition of Eagle Cement (EAGLE PM) at P22.02/share. On the 28 October, Philippine Competition Commission said it had no issue.
- The Tender Offer is now out, and the Offer is open for acceptance. The IFA considers the Offer price to be fair.
- The Offer closes on the 5 December with an expected payment on the 14 December.
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