In today’s briefing:
- Senko Group (9069 JP) Offering – Banks and Insurers Unwinding Cross-Holdings in Offering
- Outsourcing (2427 JP) – Earnings Out, With a Bigger Impairment, But Not Clearly A MAC
- Outsourcing (2427 JP): The Weak 4Q Unlikely to Deter Bain
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: One Deletion & Capping Changes
- APM Human Services (APM AU) Rejects CVC’s NBIO
- Quiddity Leaderboard TDIV Mar 24: 8 Days to Sell in Bizlink
- Quiddity Leaderboard T50/100 Mar 24: Bizlink TDIV DEL; Foxtron’s Futile Rally; One More Surprise
Senko Group (9069 JP) Offering – Banks and Insurers Unwinding Cross-Holdings in Offering
- SENKO Group Holdings Co., Ltd. (9069 JP) today announced large financial institutional cross-holders would sell shares in a Secondary Offering. There’s a buyback on the back end.
- Cross-Holding unwinding is the subject of the moment. It will continue to be so. It will involve selldowns, and buybacks. Study the model of what companies must do what.
- In this case, Senko has a LOT of cross-holders and minimal excess cash. So investors buy more shares. But there is a buyback and index demand to come.
Outsourcing (2427 JP) – Earnings Out, With a Bigger Impairment, But Not Clearly A MAC
- Outsourcing Inc (2427 JP) delayed its earnings from 14 February to 19 February on tardiness in calculating impairment losses. That caused a short sharp shock in share price.
- An article came out suggesting it was a small number, and domestic biz EAS-related. Results today do not suggest EAS-related, and half is overseas. But no suggestion of precondition breach.
- For that, I think this probably goes through, and the EC FSR review period should end on 20 Feb so a deal announcement by Friday is eminently possible.
Outsourcing (2427 JP): The Weak 4Q Unlikely to Deter Bain
- Outsourcing Inc (2427 JP) has disclosed a weak 4Q materially below guidance due to cost overruns and JPY6,875 million in impairments. The results did not provide an update on Bain’s tender.
- The weak 4Q has raised concerns that Bain would reconsider terms. Our take is that the results will not warrant a change in the DCF valuation or breach a pre-condition.
- Bain is likely to consider the results a reflection of near-term industry weakness rather than company-specific issues. The annualised spread for a March-end completion is 9.8%.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: One Deletion & Capping Changes
- Bizlink Holding (3665 TT) should be deleted from the Yuanta/P-Shares Taiwan Dividend Plus ETF in March and that will trigger selling of over 8 days of ADV.
- There will be capping and funding flows due to the higher AUM and passive trackers will need to trade over 0.4x ADV in 5 stocks.
- Shorts have covered positions in Bizlink Holding (3665 TT) but there has been a recent uptick that could be linked to positioning for the rebalance.
APM Human Services (APM AU) Rejects CVC’s NBIO
- Employment and disability services play APM Human Services (APM AU) has rejected PE-outfit CVC Asia Pacific’s proposal, which valued APM at less than half of its November 2021 IPO price.
- APM confirmed it had received – on Friday, 16 February – a conditional and non-binding A$1.60/share indicative proposal. That’s a 93% premium to undisturbed. Yet, APM’s IPO Price was A$3.55/share.
- CVC – and other suitors – need to persuade executive chair and founder Megan Wynne and US private equity group Madison Dearborn, who collectively control ~65% of the company.
Quiddity Leaderboard TDIV Mar 24: 8 Days to Sell in Bizlink
- In this insight, we take a look at Quiddity’s flow expectations for the March 2024 index rebal event.
- Today is the base date for the March 2024 index rebalance. Based on the closing prices today, I expect one DEL for the TDIV index in March 2024.
- Separately, I also expect the AUM assumption to be revised in March 2024.
Quiddity Leaderboard T50/100 Mar 24: Bizlink TDIV DEL; Foxtron’s Futile Rally; One More Surprise
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the March 2024 index rebal event.
- I expect one change for the T50 index and two other changes for the T100 index.
- The two T100 expected DELs are special because one could be a surprise deletion due to liquidity test failure and the other one is TDIV member with significant flow implications.
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