In today’s briefing:
- Toyo Cancels Poison Pill At Last Minute – Range to the Upside
- Soosan Industries IPO Preview
- DAX/MDAX/SDAX Quiddity Leaderboard Sep 2022: Rheinmetall, HelloFresh, & Other Potential Changes
- Launch of Kindex Nuclear Theme Deep Search ETF & Hanaro Nuclear ISelect ETF in Korea
- STOXX Europe Quiddity Leaderboard Sep 2022: 10 ADDs/DELs & Some LONG-SHORT Ideas
- Tokyo Electron (8035): Semiconductor Supply Chain at Risk of a Downturn
- VW Consortium Just Shy of 90% Threshold of Europcar
- Indian Recommerce Startup Nets $90m in Series E Money
- Short Builders FirstSource (BLDR) On Overearning and Housing Downturn Thesis
Toyo Cancels Poison Pill At Last Minute – Range to the Upside
- On 24 May, Toyo Construction (1890 JP) (TC) came out fighting against Yamauchi No.10 Family Office (YFO), presenting a poison pill and accusing YFO of “extreme dishonesty” despite standstill agreement.
- YFO presented hundreds of pages of defence, TC continued to accuse the YFO co-CIO and others of wrongdoing. To me, TC was clearly acting in bad faith.
- After ISS and later Glass Lewis came out against TC’s proposal, YFO continued to ask for the PP to be pulled, TC has finally relented. Now we wait some more.
Soosan Industries IPO Preview
- Soosan Industries is getting ready for an IPO in Korea at end of July. The IPO offering range is from $155 million to $191 million.
- Soosan Industries provides comprehensive maintenance services for major nuclear, thermal, and renewable power plants in Korea. It is the only private maintenance company for main nuclear power plant equipment.
- In our view, this is the third most interesting IPO opportunity in Korea this year so far, after LG Energy Solution (373220 KS) and HPSP.
DAX/MDAX/SDAX Quiddity Leaderboard Sep 2022: Rheinmetall, HelloFresh, & Other Potential Changes
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the DAX, MDAX, and SDAX Indices for the September 2022 Rebalance.
- Aareal Bank AG (ARL GR) and Deutsche Euroshop Ag (DEQ GR) are currently involved in takeover situations which might also have index change implications.
- Based on current data, Rheinmetall (RHM GR) is leading the race to become a DAX ADD and HelloFresh (HFG GR) is leading the race to become a DAX DEL.
Launch of Kindex Nuclear Theme Deep Search ETF & Hanaro Nuclear ISelect ETF in Korea
- Korea Investment Management will be launching a new nuclear power related ETF called Kindex Nuclear Theme Deep Search ETF on 28 June.
- NH-Amundi Asset Management will also be launching Hanaro Nuclear iSelect ETF on 28 June. Both ETFs are the first ones to focus on the nuclear power related stocks in Korea.
- The launch of these ETFs should have a positive impact on the major nuclear power related stocks including Doosan Enerbility (034020 KS) and Kepco Plant Service & Engineering (051600 KS).
STOXX Europe Quiddity Leaderboard Sep 2022: 10 ADDs/DELs & Some LONG-SHORT Ideas
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EuroSTOXX Indices for the September 2022 Rebalance.
- Based on current rankings, I estimate there to be 10 ADDs/DELs for the STOXX Europe 600 Index including potential M&A-related deletions.
- In addition, I have discussed some LONG-SHORT pairs with interesting potential index flow dynamics.
Tokyo Electron (8035): Semiconductor Supply Chain at Risk of a Downturn
- Nanya Technology has warned of a downturn that could last to the end of the year. This follows reports of procurement delays in response to excess inventory at Samsung.
- Inflation, the Fed’s attempt to kill it with higher interest rates, and the growing risk of recession now threaten not only Tokyo Electron but the entire semiconductor supply chain.
- Record capital spending plans should be fully discounted. Potential delays and cutbacks now put a burden of uncertainty on the sector.
VW Consortium Just Shy of 90% Threshold of Europcar
- At the expiry of the initial offer period, a total of 87.38% of the share capital was tendered, just shy of 2.62% to implement a squeeze-out.
- The market believes the 90% threshold will be reached, thus enabling the squeeze-out procedure. This means that the additional €0.01/share price supplement should be paid.
- Gross spread is 0.24% (shares trade above the €0.5 offer price) and the estimated annual return is 4.82% (estimated settlement on 11 July). Recommendation is long and tender.
Indian Recommerce Startup Nets $90m in Series E Money
- Cashify, an India-based recommerce marketplace, has closed a US$90 million series E round, which saw participation from NewQuest Capital Partners, Prosus, and Paramark Ventures.
- The new funds will be used to further develop Cashify’s team, marketing efforts, technology infrastructure, and market expansion.
- Founded in 2013 by Mandeep Manocha, Siddhant Dhingra, Nakul Kumar, and Amit Sethi, Cashify provides aftersale services such as repairs and buybacks to extend the lifespan of gadgets
Short Builders FirstSource (BLDR) On Overearning and Housing Downturn Thesis
- Acquisitions and product price increases amid home-buying demand drove a dramatic increase in sales. Product shortages and operating leverage enabled the company to push EBITDA margins 1000bps.
- The macro environment for homebuilding is inflecting. GDP posted a down since 2014. Consumer sentiment is collapsing from the surge in inflation, political acrimony, crime and the war in Ukraine.
- The stock is expensive on normalized margins. After a dramatic run, the stock trades at high multiples of normalized earnings, but deceptively moderate multiples on inflated earnings.
Before it’s here, it’s on Smartkarma
