In today’s briefing:
- Brilliance China (1114 HK): Driving Back Into Passive Portfolios
- March 2024 Nikkei 225 Rebal – Look for Zozo, Ryohin Keikaku, and Maybe a Socionext Split
- Quiddity A/H Premium Weekly (Sep 8): ICBC, ABC, CCB, BOC, Vanke, NCL, Rails
- The New Aisin (7259) MTP – Selling Crossholdings, Eventually
- Kenedix J-REIT Family Merger – Still Room (And Time) To Move
- SK Square: Will Alibaba Acquire 11st?
- Latest Development & Potential First Target of Mandatory Tender Offer in Korea
- IMAX China (1970 HK)’s Offer: 10th Oct Shareholder Vote
- TUHU Car IPO: Valuation Insights
- Anycolor (5032) – Great Quarter Guys! Again. Context Issues. Still.
Brilliance China (1114 HK): Driving Back Into Passive Portfolios
- Brilliance China Automotive (1114 HK) was deleted from local and global indices following its prolonged trading suspension from April 2021 to September 2022.
- Following the resumption of trading, Brilliance China Automotive (1114 HK) was added to the HSCI in March and subsequently to Southbound Stock Connect.
- The stock should be bought by global passive trackers over the next few months and there should be substantial passive inflows.
March 2024 Nikkei 225 Rebal – Look for Zozo, Ryohin Keikaku, and Maybe a Socionext Split
- Now that the September 2023 Nikkei 225 Rebal is announced, we look at the March 2024 rebal and its possibilities.
- Socionext (6526 JP) is the only automatic ADD, but it might not be. ZOZO Inc (3092 JP) and Ryohin Keikaku (7453 JP) would be sector balance ADDs.
- Fast Retailing (9983 JP) could get capped if it outperforms Nikkei 225 by ~10%+ to 31Jan2024. And Nitori Holdings (9843 JP) will see an add of ~14 days of ADV.
Quiddity A/H Premium Weekly (Sep 8): ICBC, ABC, CCB, BOC, Vanke, NCL, Rails
- The Brand-Spanking New (three weeks old) A-H Monitor has tables, charts, measures galore.
- New stimulus measures appear to be triggering FOMO on real estate stocks, but a foreshortened week, yet again, makes one wonder. There IS money being applied though.
- I expect more measures and more buying. I am not sure I would want to be short any Hs with a deep discount to the A the next few months.
The New Aisin (7259) MTP – Selling Crossholdings, Eventually
- Toyota Group autoparts maker Aisin Seiki (7259 JP) today announced a new Medium-Term Plan. They plan to shift their business away from “entrusted” business, towards BEV, Brakes, and “Safe/Comfort Entry”
- They aim to grow revenues 25% from 2021 to 2025 and an additional 10-20% by 2030.
- They also aim to improve investment and capital efficiency, and that’s where we can look at the interesting possibilities.
Kenedix J-REIT Family Merger – Still Room (And Time) To Move
- In mid-June, three months ago yesterday, Kenedix Office Investment Co (8972 JP), Kenedix Retail REIT (3453 JP), and Kenedix Residential Investment (3278 JP) announced a three-way merger for Nov1.
- All three popped in price, and peaked three weeks later, both outright and vs Peers. Then it fell sharply back.
- It is worth looking at the new Combined “KDX” entity on a pro-forma basis. There should be more to go.
SK Square: Will Alibaba Acquire 11st?
- Maeil Business Daily reported that Alibaba Group Holding (9988 HK) is considering on acquiring a controlling stake in 11st, which is a leading e-commerce platform owned by SK Square
- In 2018, 11st was valued at 2.7 trillion won by financial investors. However, the current valuation of 11st is estimated to have declined to about 1 trillion won (US$760 million).
- We estimate that the probability of Alibaba acquiring 11st is about 60-70%.
Latest Development & Potential First Target of Mandatory Tender Offer in Korea
- Considering the progress of the legislative process at this juncture, the effective date could be as early as the end of this year or, at the latest, early next year.
- Ilooda (164060 KS) will likely become the first case. A tender offer at ₩11,000 (a 30% premium to the current price) per share for 14%+1 share may greet us.
- There is sufficient value in monitoring the interaction between the offer structure and stock price movement in the context of the first application of a mandatory tender offer in Korea.
IMAX China (1970 HK)’s Offer: 10th Oct Shareholder Vote
- Back on the 13 July, IMAX China Holding (1970 HK) announced a take-private transaction from its parent IMAX Corp (IMAX US) at HK$10/share. Terms have been declared final.
- The price is a 9.65% premium to last close but a 39.47% premium over the closing price on the last full trading day, suggesting apparent news leakage.
- The Scheme Doc is out and independent shareholders get to vote on the transaction on the 10th October. This vote could – should – be close. Only for the brave.
TUHU Car IPO: Valuation Insights
- Tuhu Car (2007986D HK), a leading integrated online and offline platform for automotive service in China, has launched its HKEx IPO at a price range of HK$28.00-31.00 per share.
- In TUHU Car IPO: The Investment Case, we highlighted the key elements of the investment case. In this note, we present our forecasts and discuss valuation.
- Our valuation analysis suggests that Tuhu is reasonably priced at the IPO price range. We would participate in the IPO.
Anycolor (5032) – Great Quarter Guys! Again. Context Issues. Still.
- Nine months ago I first wrote on Anycolor (5032 JP). I thought the guidance growth pattern and valuations remarkable. Results handily beat guidance. Now we’re in Year 2 of guidance.
- After the first full year listed, FY2024 guidance was for +30% in revenue to ¥33bn, and +35% growth in OP. For Q1, reported yesterday, actual results were +51% and +91%.
- The stock is popping this AM, but it is still cheap vs growth rates and margins. There are, notably, still “context issues” here. They merit some consideration (and investigation).
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