In today’s briefing:
- China TCM (570.HK) Update – Behind The Share Price Plunge and Prospects for Privatization Progress
- Big ¥500bn Honda (7267) Offering Is Small
- Japan Cross-Shareholding – Summary Matrix – Over US$100bn of Selling in 118 Companies
- JAPAN ACTIVISM: Strategic Capital Target Daido (3205) Now A Murakami Target Too
- Screening For The Next Douyu (DOYU US)
- Sunwels Co (9229) – Nursing Care Operator Offering and TOPIX Inclusion
- Honda (7267 JP): A US$3.3 Billion Secondary Offering
- Yangzijiang Shipbuilding (YZJSGD SP): Cheaper than Peers with Index Inclusion Kicker
- Honda Motor Placement – Large in Size, Relatively Small in Other Terms
- A Practical Guide to Create A Workable Electronic File for KOSPI 200 Rebalancing Simulation
China TCM (570.HK) Update – Behind The Share Price Plunge and Prospects for Privatization Progress
- The slow progress of privatization is related to recent high-level changes in CNPGC. Decisions on SOE deals with “strategic purpose” require careful considerations, not based on “one leader’s personal preferences”.
- Based on public information, we cannot find convincing reason to prove that CNPGC has changed its mind.There’re rumors that China TCM’s privatization is still considered important project on the agenda.
- China TCM’s has strong fundamentals to support valuation. If there is no announcement, the privatization process is expected to proceed as usual, and we continue to wait for the voting.
Big ¥500bn Honda (7267) Offering Is Small
- Just pre-close on 2 July, Reuters carried an article suggesting a ¥500bn secondary offering in Honda Motor (7267 JP) as insurers sold. The stock fell 4% in minutes.
- Honda semi-confirmed but it took two days to get to the details, now out. The stock climbed in the meantime.
- At launch, this deal is two-thirds covered by buyback + passive demand but the supply is heavily-weighted to retail. Cheaper than it looks, lots of moving parts. Read the details!
Japan Cross-Shareholding – Summary Matrix – Over US$100bn of Selling in 118 Companies
- Following up on our earlier cross-shareholding work, in this note we look to summarize our work so far by looking at where most of the selling will likely come.
- Of the seven companies that we have looked at so far, collectively they have around US$102bn worth of shares to sell in 118 companies.
- Of these, they have a combined stake of over US$1bn in 23 companies.
JAPAN ACTIVISM: Strategic Capital Target Daido (3205) Now A Murakami Target Too
- Small cap Japanese manufacturer and purveyor of apparel Daidoh Ltd (3205 JP) has consistently been a target for value investors. In late 2022, Strategic Capital went over 5%.
- They have bought more, and as of end-March, they declared 24.85% of TSO (28% of voting rights), but they have 33%. They made proposals for the AGM. They won one.
- Now Murakami-san has bought in, going over 5%. This gets interesting. Together they have 39.4% as of last week, and probably more now. That should get them 50+% next AGM/EGM.
Screening For The Next Douyu (DOYU US)
- In a particularly altruistic move, live-streaming game platform play Douyu International Holdings (DOYU US) announced a special cash dividend of US$9.76/share, vs. a last price of US$12.59.
- The cash outlay is roughly US$308mn, and Douyu had cash (as at 1Q24) of US$936.6mn. And no debt. Founder/chairman/CEO Shaojie Chen (17.2% shareholder) will pocket a tidy ~US$53mn.
- An outlier; or should we expect more of the same for other cash-rich US-listed China plays?
Sunwels Co (9229) – Nursing Care Operator Offering and TOPIX Inclusion
- On 2 July 2024, nursing care operator SUNWELS Co (9229 JP) announced a sale of Treasury shares and newly-issued shares, and with it, a move to TSE Prime (therefore TOPIX)
- The stock, of course, popped. The stock starts with VERY low float because the CEO and his company own 64% of shares out ex-treasury.
- The offering is much larger than the TOPIX inclusion, so this is really more about the growth story.
Honda (7267 JP): A US$3.3 Billion Secondary Offering
- Honda Motor (7267 JP) has announced a secondary offering of up to 298.9 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY535 billion (US$3.3 million).
- The offering is another sign that the unwinding of cross-shareholdings is catching pace as part of Japan’s corporate governance reforms.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 17 and 22 July (likely 17 July).
Yangzijiang Shipbuilding (YZJSGD SP): Cheaper than Peers with Index Inclusion Kicker
- The rally in Yangzijiang Shipbuilding (YZJSGD SP) over the last month should result in the stock being added to global passive portfolios late next month.
- Yangzijiang Shipbuilding (YZJSGD SP) trades cheaper than peers on forward PE but there has been a big rally in the stock over the last month.
- There has been an increase in cumulative excess volume since mid-May and there will be positioning for the event, but there could be further gains in the stock.
Honda Motor Placement – Large in Size, Relatively Small in Other Terms
- A group of shareholders aims to raise up to US$3.2bn via selling around 5% of Honda Motor (7267 JP) .
- The possibility of such a selldown was flagged earlier in the week by Reuters. Thus, the deal is well flagged.
- In this note, we will talk about the placement and run the deal through our ECM framework.
A Practical Guide to Create A Workable Electronic File for KOSPI 200 Rebalancing Simulation
- Predicting KOSPI 200 rebalancing is straightforward, focusing on quantitative screening rather than qualitative factors, unlike other indices.
- Accurate simulation of KOSPI 200 requires daily data on shares, volume, and prices for six months, typically sourced from KOSCOM due to limitations in free data access.
- I plan to share a practical KOSPI 200 simulation file with Smartkarma readers, leveraging freely available data from Google Finance.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
