In today’s briefing:
- The Fast Retailing (9983) Selldown Conundrum – Not Now, But Soon… Then For A Long Time
- Celltrion Merger Announcement in July: Trading Angles Utilizing Appraisal Rights Exercise Dynamics
- July TOPIX FFW Rebal – Bigger Than Expected
- Korea – A Look at Ecopro, Kumyang & JYP Entertainment
- Canon (7751) Buyback Almost Done, TPX Selldown to Come = Trade Vs Ricoh or Basket
- IMAX China (1970 HK): Parent Privatisation
- Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity
- Patanjali Foods FPO – Very Well Flagged with a Decent Discount
- Ohayo Japan| Lower Rates, Higher Stocks; Crypto Optimism; NUGGET: Hydrogen Future – KHI(7012)Revisit
- TRYT IPO: Valuation Updates
The Fast Retailing (9983) Selldown Conundrum – Not Now, But Soon… Then For A Long Time
- Fast Retailing (9983 JP) announced Q2 earnings two weeks ago. Revenues were good. OP was good. And the company raised full-year forecasts for Sales, OP, Pre-tax, and Net Profit.
- The stock popped sharply. It isn’t “cheap” but it is under-owned, actively. And revenues up 20%yoy is a very good look.
- The Conundrum: the more active investors decide they like it, the more there is to sell. That creates interesting opportunities.
Celltrion Merger Announcement in July: Trading Angles Utilizing Appraisal Rights Exercise Dynamics
- According to Invest Chosun, Celltrion plans to submit a merger registration statement to the KRX in July, with Mirae Asset Securities acting as the lead underwriter.
- Given that the approximate timing of the merger registration statement submission has already been exposed to the market, we can track the difference between the spot and exercise prices.
- Celltrion Inc will likely attempt to minimize the appraisal rights price. We can consider capitalizing on this possibility by shorting Celltrion Inc while going long on the other two companies.
July TOPIX FFW Rebal – Bigger Than Expected
- Last Friday, the FFW changes for the TOPIX July Free Float Weight Review were announced. There have also been other recent announcements creating flows on 30 July.
- Some of these other recent announcements represent a possible change in ad hoc methodology.
- Total Flow for 30 July is ~$3.3bn a side driven by selling flows (3/4 of the buy flows are reverse funding). $2.1bn of selling is > 3 days ADV.
Korea – A Look at Ecopro, Kumyang & JYP Entertainment
- We take a look at Ecopro Co Ltd (086520 KS), Kum Yang (001570 KS) and Jyp Entertainment (035900 KS) since they appear to be on investor radars.
- Foreign investors have been buyers while retail have been sellers in Ecopro Co and Kum Yang over the last month, while foreign investors have continued to buy Jyp Entertainment.
- Short interest on all stocks has dropped over the last month, though there has been a recent tick up in shorts on Jyp Entertainment (035900 KS).
Canon (7751) Buyback Almost Done, TPX Selldown to Come = Trade Vs Ricoh or Basket
- Canon Inc (7751 JP) announced a second buyback this fiscal year on 15 June. As discussed here previously, Canon buybacks are short, sharp, and sweet.
- The recent one should be done imminently (15 May start ended 13 July). 16 June start? (Note: Canon reports buyback results at 3pm local time, and did not report today).
- This time we have a double-setup with buyback ending and a large TOPIX sell on Canon on 28 July.
IMAX China (1970 HK): Parent Privatisation
- This morning (13 July), IMAX China Holding (1970 HK) announced a take-private transaction from its parent IMAX Corp (IMAX US) at HK$10/share.
- The Offer price is a 9.65% premium to last close but a 39.47% premium over the closing price on the last full trading day. Evidently, there was news leakage.
- IMAX US holds 71.63% in IMAX China, therefore the blocking stake at the Schene Meeting is 2.837% of shares out.
Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity
- Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
- It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good.
- Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.
Patanjali Foods FPO – Very Well Flagged with a Decent Discount
- The promoters of Patanjali Foods aim to sell up to 9% of the company via an FPO.
- The sale is being done so as to increase the firm’s public shareholding to the minimum required 25% imposed by SEBI.
- We have looked at the background of the deal in our earlier note, in this note we talk about the recent update and run the deal through our ECM framework.
Ohayo Japan| Lower Rates, Higher Stocks; Crypto Optimism; NUGGET: Hydrogen Future – KHI(7012)Revisit
- OVERSEAS. Disinflation Trade on as US PPI provides more tailwinds; Rates, USD Fall; Equites rally, More China Stimulus Coming ? Ripple resolution spurs Crypto bid; AI Wars: Meta Updates BARD
- JAPAN. Nikkei Futures +1% vs Cash; USDJPY 138; Set for Beta bid in Stocks; Blow out Fast Retailing numbers; Barclays see Sept BOJ tweek; Bullish Bank Initiations from UBS
- NUGGET. Hydrogen is a key part of JP Govt carbon zero strategy. We see KHI(7012) as a Hydrogen winner and see the recent pullback as a good entry opportunity
TRYT IPO: Valuation Updates
- TRYT has priced its IPO at ¥1,200 per share, at the midpoint of the indicative IPO price range, at a market capitalisation and post-money EV of ¥120bn and ¥151.6bn respectively.
- In our previous insight, we compared the company’s implied trailing multiples with peer trailing multiples and concluded that TRYT’s IPO is overvalued at the above price range.
- In this insight, we have discussed our forecasts for Tryt Inc (9164 JP) and updated our valuation for the company.
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