In today’s briefing:
- SIAS Also Questions MCT/MNACT Merger, Countering/Supporting Quarz
- Razer Inc (1337 HK): Pre-Conditions Done
- KOSPI200 Index Rebalance (March): LG Energy IN; Dongwon F&B Out
- Noritsu Koki (7744) – PAAAAYDAAAAY!
- JMDC (4483 JP) – A Change of Ownership, and Future Path
- GJ Steel: Nippon Steel’s Offer Opens On The 23 February
- KOSPI 200: LG Energy Solution Inclusion and Dongwon F&B Exclusion
- Razer’s Offer Spread Risk/Reward – Pre-Conditions Fulfilled
- Meritz Financial & Meritz Fire Buybacks: Flow Estimations with MSCI/K200 Inclusion Factored
- Apollo – THL: Scheme Booklet Out, Meeting on 20th April 2022
SIAS Also Questions MCT/MNACT Merger, Countering/Supporting Quarz
- Quarz wrote an open letter questioning the Mapletree North Asia Commercial Trust (MAGIC SP) deal with MCT for MNACT shareholders, discussed here. They wrote another letter last Thursday.
- Now, Securities Investors Association (Singapore) SIAS has come out with an open letter to MCT management questioning the deal.
- There are now activists on both sides questioning this deal. That is not necessarily a bad thing.
Razer Inc (1337 HK): Pre-Conditions Done
- Razer Inc (1337 HK) has announced the remaining pre-conditions have now been fulfilled.
- The next step is the Scheme vote, which may be held in early May, with possible completion in early June.
- Despite SAMR approval last month, this transaction continues to trade wide to terms on concerns retail investors will disrupt the headcount test.
KOSPI200 Index Rebalance (March): LG Energy IN; Dongwon F&B Out
- KRX has announced the Fast Entry inclusion of LG Energy Solution (373220 KS) in the KOSPI200 Index at the close on 10 March. Dongwon F&B (049770 KS) will be deleted.
- LG Energy Solution (373220 KS)‘s inclusion in the KRX Secondary Battery Index and the BBIG Index should be announced in the next few days. That will add to passive buying.
- Local institutions have been buyers on LG Energy Solution (373220 KS) since listing while retail and foreign investors have been sellers. There is a biggish lock up expiry coming up.
Noritsu Koki (7744) – PAAAAYDAAAAY!
- Noritsu Koki (7744 JP) just sold two-thirds of its stake in subsidiary JMDC Inc (4483 JP) to Omron Corp (6645 JP) for ¥112bn – pretty good for a ¥61bn marketcap.
- This is the payday for those who have been long NK as a proxy for JMDC and possibly short JMDC against it. Now the shape of the company is different.
- A closer look at the pro-forma financial profile is warranted. It’s a lot of money. BUT… if you look today and buy today you do NOT get the special div!
JMDC (4483 JP) – A Change of Ownership, and Future Path
- JMDC Inc (4483 JP) or formerly Japan Medical Device Corp was incubated then IPOed by Noritsu Koki (7744 JP). Noritsu Koki is now selling two-thirds of its stake to OMRON.
- OMRON’s heft should help JMDC grow better with larger clients. That’s the bet OMRON is making too.
- The sale by Noritsu Koki reduces potential overhang from a share sale which heretofore had been a possibility.
GJ Steel: Nippon Steel’s Offer Opens On The 23 February
- Both G J Steel PCL (GJS TB) and G Steel (GSTEL TB) have announced Form 247-4, the Notification on Receipt of the Tender Offer for Securities, from Nippon Steel.
- As expected, the Offer period is for 25 days, between 23 February and 29 March. The payment is the 31 March.
- GJS is trading tight to terms. The Offer is unconditional.
KOSPI 200: LG Energy Solution Inclusion and Dongwon F&B Exclusion
- On 22 February, the KRX announced that LG Energy Solution (373220 KS) will be included in numerous local indices including KOSPI 200, KOSPI 100, and KRX 100 effective 3/11/2022.
- This has been widely expected by the market. Due to the inclusion in KOSPI 200, investors will be able to short LG Energy Solution starting 11 March.
- Once Dongwon F&B is excluded from the KOSPI 200 index, this could be a key buying opportunity on this stock, given the company’s solid fundamentals.
Razer’s Offer Spread Risk/Reward – Pre-Conditions Fulfilled
- Razer Inc (1337 HK) announced that all the pre-conditions were fulfilled. The scheme document will be released after the FY21 results (scheduled on or before 17 March).
- The headcount test is a key challenge. While the deal’s success benefits from the de-rating of technology shares, it is also undermined by Logitech International SA (LOGN SW)’s strong 3Q.
- The shares are broadly fairly valued at last close both on a SoTP and deal probability basis. We would be buyers up to HK$2.5 per share (implies 65% deal probability).
Meritz Financial & Meritz Fire Buybacks: Flow Estimations with MSCI/K200 Inclusion Factored
- Meritz Financial Group and Meritz Fire once again announced stock buybacks worth 100 billion won each. Like last time, this will likely be completed within 2-3 months.
- This buyback size is not small: 1.86% and 1.95% of SO. Assuming that the buyback completes with equal volume for 60 trading days, it is 0.08x and 0.06x ADTVs, respectively.
- Of particular note is Meritz Fire. It is because the KOSPI 200 inclusion is waiting even after March 1. Approximately ₩0.10T of passive money will flow in.
Apollo – THL: Scheme Booklet Out, Meeting on 20th April 2022
- The Scheme Booklet for the Apollo-THL Deal was published yesterday. The Scheme Meeting will be held at 10.00am (AEST) on Wednesday, 20th April 2022.
- The Independent Expert has concluded that the Scheme is fair and reasonable and in the best interests of Apollo Tourism & Leisure Ltd (ATL AU) shareholders.
- The spread has contracted since my previous insight Apollo – THL: Scrip Merger of RV Travel Companies Trading Wide Now. Below is an update on this situation.
Before it’s here, it’s on Smartkarma
