In today’s briefing:
- Rakuten’s Fortunes Could Change With The Rakuten Bank IPO
- Hwa Hong (HWAH SP): MGO Triggered, Offeror Now Controls 38.2%
- JAPAN ACTIVISM: Silchester’s Bank of Kyoto AGM Results – Activism Still Failing
- SKIET Block Deal: Passive Impact on TIGER (WISE) Secondary Cell ETF Rebalancing
- LG Energy Solution: Potential Sellers Post Lock-Up End, Mkt Share Losses, & LG Chem’s Capital Needs
- HSI Index Rebalance Preview: Finding the Balance
- TPG Telecom Possible Selldown – Founder Could Look to Raise up to US$1bn with a Clean Exit
Rakuten’s Fortunes Could Change With The Rakuten Bank IPO
- One of Japan’s largest internet companies, Rakuten Inc (4755 JP) applied to list its consolidated subsidiary, Rakuten Bank (EBANKZ JP) on the Tokyo Stock Exchange on the 4th of July.
- With steady customer account growth mostly assured through leveraging Rakuten’s eco-system with more than 36.0m monthly active users, Rakuten Bank is likely to be valued at over ¥500bn.
- Thus, we think the Rakuten Bank IPO could change Rakuten’s fortunes and help the share price bounce back from a 10-year low level.
Hwa Hong (HWAH SP): MGO Triggered, Offeror Now Controls 38.2%
- As a result of market acquisitions, the Offeror for Hwa Hong Corp (HWAH SP) now holds 30.0%, triggering a mandatory general offer (MGO).
- Including shares tendered, the Offeror controls 38.24%. The Offer remains subject to a 50% acceptance condition. HWAH directors holding 29.26% of shares still do not intend to accept the Offer.
- The S$0.40/share Offer price has been declared final. The final closing date is 1 August. This transaction will go down to the wire.
JAPAN ACTIVISM: Silchester’s Bank of Kyoto AGM Results – Activism Still Failing
- Silchester, after holding Bank of Kyoto (8369 JP) shares 16 years, becoming the largest investor, FINALLY publicly asked the bank to make a gesture to pay out a tiny special div.
- The bank rejected them, but they took it to to the AGM. And there Silchester got rejected by the shareholders. Soundly. Hostile activism is not going to be easy here.
- But all is not lost. Since December, the bank has raised its payout ratio to 50% and has promised to cut a piece of its cross-holdings in the MTMP.
SKIET Block Deal: Passive Impact on TIGER (WISE) Secondary Cell ETF Rebalancing
- This block deal won’t lead to a float increase event. Nevertheless, it will substantially impact the rebalancing of the TIGER (WISE) Secondary Cell ETF next week.
- A passive net inflow of up to ₩10B occurs, equivalent to 0.5x ADTV. Indeed, this level provides a significant day trade setup.
- With today’s price correction, SKIET’s index weight will drop to the high 4% range. Applying the 36% float to today’s price will increase the weight to 5.5% at the rebalancing.
LG Energy Solution: Potential Sellers Post Lock-Up End, Mkt Share Losses, & LG Chem’s Capital Needs
- Although LG Chem may not sell additional stake in LGES this year, over the next 2-3 years, there is a high probability of LG Chem selling some stake in LGES.
- On 27 July 2022, 86% stake of LG Energy Solution could be sold, of which 81.8% is owned by LG Chem and the remaining 4.2% is owned by institutional investors/others.
- LGES’s market share in the global rechargeable battery usage declined significantly from May 2021 to May 2022, due to recent EV disruption at Tesla’s Shanghai plant and rise of BYD.
HSI Index Rebalance Preview: Finding the Balance
- Currently at 69 constituents, it is unlikely that we reach 80 member by year end. Hang Seng Indexes is finding it tough to reach the target by excluding unprofitable companies.
- We list 11 stocks that could be added to the index in September – with one-way turnover just over 5%, the actual number of inclusions will be lower.
- There are a few potential inclusions where short interest is over 5% of the free float. These stocks could see short covering ahead of announcement of the changes.
TPG Telecom Possible Selldown – Founder Could Look to Raise up to US$1bn with a Clean Exit
- TPG Telecom was formed by a merger of Vodafone and TPG in Jul 2020. The merger resulted in the shares owned by Vodafone, Hutchison and DavidTeoh, being put in escrow.
- The lockup on those shares will expire this month. David Teoh, TPG’s founder, has sold some stock before in Dec 21 and could look to exit his remaining shareholding.
- In this note, we talk about the upcoming lock-up release and its dynamics.
Before it’s here, it’s on Smartkarma
