In today’s briefing:
- HSTECH Index Rebalance Preview: $800m Round-Trip Trade
- Korea Zinc’s Buyback Tender Offer at ₩830,000: Market Vibe Still Leans Towards MBK
- ASMPT (522 HK): KKR’s Proposal Is A Non-Starter
- Korea Zinc (010130 KS)’s ₩830,000/Share Offer. Mmm …
- KOSPI200 Index Rebalance Preview: 4 Adds, 5 Deletes Likely in December
- Legal Chaos Amid Young Poong Filing a Criminal Complaint Against Korea Zinc’s BOD and What’s Next?
- Quiddity Leaderboard HSTECH Dec 24: Midea Group Question Mark and Final Rankings for Exp ADDs/DELs
- Kusuri No Aoki (3549) Big Buyback – Accretive, And May Involve Musical Shares
- Rigaku Holdings (268A JP) IPO: The Bear Case
- MBK Hikes Youngpoong Precision Tender Price to ₩30,000: Tender Deadline Extended to the 14th
HSTECH Index Rebalance Preview: $800m Round-Trip Trade
- The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
- We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
- If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.
Korea Zinc’s Buyback Tender Offer at ₩830,000: Market Vibe Still Leans Towards MBK
- Korea Zinc is launching a 3.21M share buyback (15.5% of total shares) via a KRW 2.66T tender offer at ₩830,000 per share, with Bain Capital involved.
- If tendered shares fall short, Korea Zinc and Bain Capital will buy all. If over the target, they’ll buy pro rata. Below 1,215,283 shares, they will opt out.
- Should we dive into Korea Zinc’s risky buyback or choose safer, lower-priced MBK? The market vibe favors MBK, reflected in Korea Zinc’s closing price today.
ASMPT (522 HK): KKR’s Proposal Is A Non-Starter
- Reportedly – Bloomberg – KKR has made a non-binding proposal for ASM Pacific Technology (522 HK), the world’s leading back-end semiconductor production equipment supplier.
- ASMPT’s largest shareholder, ASM International Nv (ASM NA), with 25%, has been the focus of activists for some time to sell its stake.
- This bid has all the hallmarks of the approach (also cited by Bloomberg) by PAG last year. Which came to nought. From a regulatory standpoint, I can’t see this happening.
Korea Zinc (010130 KS)’s ₩830,000/Share Offer. Mmm …
- Never a dull moment for Korea Zinc (010130 KS) (KZ). After MBK/Young Poong’s injunction to block KZ’s buyback was denied, KZ, together with Bain Capital, tabled a punchy Offer.
- KZ has launched a 3.21mn share buyback (15.5% of shares out) at ₩830,000/share. Bain will also buy 2.5%. KZ’s buyback is to be funded by short-term loans and corporate bonds.
- MBK/Young Poong have filed another injunction against this buyback. Its case has merit. And that legal overhang ostensibly accounts for KZ trading ~14% below the buyback terms.
KOSPI200 Index Rebalance Preview: 4 Adds, 5 Deletes Likely in December
- 85% of the way through the review period, there could be 4 adds and 5 deletes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) in December.
- The impact on the potential inclusions ranges from 1.4-17 days of ADV while the impact on the potential deletions varies from 4-8 days of ADV.
- The potential adds outperformed the potential deletes early in the review period before giving up all the gains over the following months.
Legal Chaos Amid Young Poong Filing a Criminal Complaint Against Korea Zinc’s BOD and What’s Next?
- Young Poong filed a criminal complaint against the board of directors of Korea Zinc (010130 KS) who voted in favor of the tender offer by buying back Korea Zinc’s shares.
- If Korea Zinc proceeds with the share buyback at higher price than the tender offer price by MBK, there are two main scenarios.
- Trading Action Point: If Uncertain, Watch the Price Action in the Next Several Days
Quiddity Leaderboard HSTECH Dec 24: Midea Group Question Mark and Final Rankings for Exp ADDs/DELs
- The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
- In this insight, we take a look at the final rankings of potential ADDs and potential DELs for the December 2024 index rebal event.
- We do not expect any changes for the HSTECH index in December 2024. However, we expect there to be capping flows of US$1,079mn one-way.
Kusuri No Aoki (3549) Big Buyback – Accretive, And May Involve Musical Shares
- The drugstore space in Japan is super-interesting. The stories, the mergers, the activists. And of course, the defence against activists.
- In Feb-2024, Aeon did a deal with an activist to cause a future deal between Tsuruha and Welcia. Aeon also owns a stake in Kusuri no Aoki Holdings (3549 JP).
- The Aoki brothers (CEO and VP) exercised warrants in August and re-arranged their holdings. Now the family owns 34.7%. Today, after Q1 earnings, the company announced a 5+% buyback.
Rigaku Holdings (268A JP) IPO: The Bear Case
- Rigaku Holdings (268A JP) is Japan’s leading manufacturer of X-ray analysis, measurement and testing instruments. It is seeking to raise up to US$760 million.
- In Rigaku Holdings (268A JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on weakening forward growth indicators, China revenue risk, rising cash conversion cycles, mid-tier FCF margin and large post-IPO share overhang.
MBK Hikes Youngpoong Precision Tender Price to ₩30,000: Tender Deadline Extended to the 14th
- MBK is raising its tender offer for Young Poong Precision to ₩30,000 per share, matching Choi’s offer and extending the deadline to October 14. Filing expected tomorrow before market open.
- MBK targets 6.84 million shares, surpassing Choi’s 3.94 million cap. No hard floor, no cancellation risk, but MBK holds an edge in proration.
- The buzz is whether MBK will raise its Korea Zinc bid beyond 900,000 KRW, as Choi prepped with a 950,000 KRW offer. A bid hike and extension seem likely.
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