In today’s briefing:
- Toshiba Board to Shareholders: “Yes, Meh But We Did Our Job, Now It’s Up To You (We’re Tired Too)”
- Toshiba – The End… Hopefully
- Toshiba (6502 JP): JIP’s JPY4,620 Tender Offer, Now for the Really Hard Part
- KOSPI 200 Flow Trading: Those Subject to a Significant Float Rate Change
- NIFTY NEXT50 / NIFTY100 Index Rebalance: Flows Change as Index Capping Methodology Changes
- KOSDAQ150 Ad Hoc Index Rebalance: EM-Tech (091120 KS) To Replace SBW Life (151910 KS)
- Quiddity Leaderboard TWSE Div+ Jun 23: 3 ADDs/DELs and US$700mn+ of Capping Flows!
- Chinese Developers’ Overview – Shift in Sentiment but a Few Still Needs Some Equity
- Rakuten Bank IPO Points That the Market Could Be Undervaluing Rakuten’s Businesses & Investments
- KOSDAQ 150: Special Changes (SBW Life Science: Deletion & EM-Tech: Addition)
Toshiba Board to Shareholders: “Yes, Meh But We Did Our Job, Now It’s Up To You (We’re Tired Too)”
- Just post-close, the Nikkei reported Toshiba’s Board had agreed a JIP deal at “around ¥2trln.” Toshiba confirmed HOURS later indicating language was still being hashed out. And the dividend cancelled.
- Toshiba “supports” the deal because it aligns a single shareholder with management goals. They cannot recommend to general shareholders because it is too low. But JIP was the only bidder.
- It raises the question of whether activists will submit to “Toshiba Fatigue” at what the Board admits is too low a price, or whether there is still fight left.
Toshiba – The End… Hopefully
- The Nikkei reported today that Toshiba’s board had chosen to accept JIP’s buyout offer.
- The purported pricing of ¥2trn is a relatively modest premium but is not a surprise and no surprise is a positive here in our view.
- All that remains is shareholder approval and while we doubt there will be too many celebrations on that front, there is likely to be relief.
Toshiba (6502 JP): JIP’s JPY4,620 Tender Offer, Now for the Really Hard Part
- Toshiba Corp (6502 JP) announced a pre-conditional tender offer by Japan Industrial Partners (JIP), the preferred bidder at JPY4,620 per share, a 9.7% premium to the last close price.
- The special committee opines that the offer is the best price that can be expected today, which sounds like we are recommending the offer as it is the only one.
- The offer has several negatives: a 14% price reduction during the process, below the undisturbed price, below the mid-point IFA DCF range and no serious effort on Plan B.
KOSPI 200 Flow Trading: Those Subject to a Significant Float Rate Change
- Samsung SDS and Meritz Financial will welcome a 6%p and 30%p increase, respectively, in the upcoming rebalancing in June.
- Assuming a K200 tracking fund size of 65 trillion won, they are expected to receive 2.69x and 5.47x ADTVs, respectively. This is enough for us to consider a preemptive position.
- However, in the case of Samsung SDS, we need to consider potential price correction by the scheduled block deal (1.95%) and develop a multi-phased approach to minimize timing conflicts.
NIFTY NEXT50 / NIFTY100 Index Rebalance: Flows Change as Index Capping Methodology Changes
- On 17 February, NSE Indices announced the results of the March index review for the Nifty Next 50 Index (NIFTYJR INDEX). There are 5 adds and 5 deletes.
- Last evening, NSE Indices announced a change in the index methodology where the cumulative weight of non-F&O stocks in the index will be capped at 10% (down from 15% earlier).
- This changes the flows at the March rebalance that will be implemented at the close of trading on 29 March.
KOSDAQ150 Ad Hoc Index Rebalance: EM-Tech (091120 KS) To Replace SBW Life (151910 KS)
- Following Nanos Co Ltd (151910 KS)‘s designation as an Investment Attention Issue, the stock will be deleted from the KOSDAQ150 Index and replaced with Em Tech Co Ltd (091120 KS).
- Passive trackers are estimated to buy 1.3 days of ADV on Em Tech Co (091120 KS) while they will need to sell 1.1 days of ADV on Nanos (151910 KS).
- Em Tech Co Ltd (091120 KS) was up yesterday but the stock is still way off its highs. The stock should trade higher over the next few days.
Quiddity Leaderboard TWSE Div+ Jun 23: 3 ADDs/DELs and US$700mn+ of Capping Flows!
- In this insight, we take look at Quiddity’s estimations for index changes and capping flows for the Taiwan Div+ index for the June 2023 review.
- I currently see 3 ADDs and 3 DELs but there are several names close to the border and expectations could change before the base date as prices move around.
- I also currently expect capping flows of US$705mn one-way with multiple names with more than five days to trade.
Chinese Developers’ Overview – Shift in Sentiment but a Few Still Needs Some Equity
- Having first introduced the three red line guidance in late 2020, the government has begun shifting its stance, and relaxing some of its regulatory oversight.
- In this note, we looked at recent news developments and how some larger developers fared against the three red lines criterion.
- Of the large developers we looked at, there are a few names which stand out which could potentially do a capital raising given their financial standing.
Rakuten Bank IPO Points That the Market Could Be Undervaluing Rakuten’s Businesses & Investments
- As Rakuten Bank (5838 JP) prepares for an IPO in April 2023, we see the potential for Rakuten’s NAV discount to narrow significantly from its current level of over 52%.
- We think the market could be unaware of the hidden value in smaller Rakuten businesses and other investments.
- Rakuten-Bank, which seems like a small piece of Rakuten’s ecosystem producing as much as 26-31% of Rakuten’s market-cap could open markets’ eyes to the undervaluation of Rakuten businesses & investments.
KOSDAQ 150: Special Changes (SBW Life Science: Deletion & EM-Tech: Addition)
- The Korea Exchange announced special changes in KOSDAQ 150 after the market close today.
- Effective 28 March, SBW Life Science (151910 KS) will be excluded from KOSDAQ 150 index and Em Tech Co Ltd (091120 KS) will replace it.
- We expect 20-30% additional upside for EM-Tech from the KOSDAQ 150 inclusion and further downside risk for SBW Life Science from the index exclusion.
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