In today’s briefing:
- Japan – Increasing Shorts on Some Interesting Stocks
- Inabata & Co (8098) – LARGE Equity Secondary Offering by Sumitomo Chemical
- SENSEX Index Rebalance Preview: Likely Wipro Deletion Opens an Index Spot
- Aequitas Japan IPOs + Placements Broker Performance 2023
- Fast Retailing: 1QFY24 Earnings
- OreCorp (ORR AU): Musings On The Minimum Bid Price
- An Update on HSCEI Index Related ELS Losses for Korean Financials + BOK’s Pivot in 2024
- Fujitsu (6702 JP): Horizon Scandal Blows Up
- Benesse (9783) – Through Terms But Maybe Not Enough To Threaten Bump as TOB Launch Approaches
- Aequitas Korea IPOs + Placements Broker Performance 2023
Japan – Increasing Shorts on Some Interesting Stocks
- There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios early next year.
- The deletion from passive portfolios will lead to a liquidity event at the end of February where passive trackers will need to sell multiple days of ADV.
- Shorts have started to increase on some of the stocks and there will be further positioning as we near the liquidity event.
Inabata & Co (8098) – LARGE Equity Secondary Offering by Sumitomo Chemical
- On Friday after the close, Inabata & Co (8098 JP) announced Sumitomo Chemical (4005 JP) would sell down a large stake in a ~$200mm secondary equity offering.
- Mizuho Bank’s Retirement Benefit Trust account sells down too. Sumitomo Chem will keep 10+% and other crossholders remain.
- This is “big” at 80 days of ADV with limited early index demand, but a 10% fall would make this cheap enough to buy vs Peers.
SENSEX Index Rebalance Preview: Likely Wipro Deletion Opens an Index Spot
- Over a third of the way through the review period of the June rebalance, we see one potential index change with Wipro Ltd (WPRO IN) in deletion zone.
- There are a bunch of stocks that could be added to the index as a replacement and price changes over the rest of the review period are important.
- Passive trackers will need to trade over 1x ADV and over 7x of delivery volume on the index changes, so there will be decent impact on the stocks.
Aequitas Japan IPOs + Placements Broker Performance 2023
- In this note, we will take a look at broker performance for Japanese IPOs and placements in 2023.
- The following dataset includes all Japanese IPOs and placements above US$100m, which amounted to a total of 32 deals.
- The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.
Fast Retailing: 1QFY24 Earnings
- Fast Retailing (9983 JP) announced its 1QFY24 results today, surpassing the consensus OP estimate by approximately 7%.
- Notably, Uniqlo International demonstrated robust growth, even from regions (North America & Europe) that were anticipated to underperform in this quarter.
- The domestic business OP also managed to top consensus expectations as they managed to improve the gross margin by 2.7% YoY.
OreCorp (ORR AU): Musings On The Minimum Bid Price
- On the 27 Dec, to circumvent Perseus (PRU AU)‘s 19.9% dissenting vote, Orecorp (ORR AU) and Silvercorp (SVM CN) agreed to an off-market takeover, on the same terms.
- That Offer – A$0.19 in cash and 0.0967 new Silvercorp shares – opened on the 3 January.
- Silvercorp paid ~A$0.51/share, on-market, just prior to the Offer. OreCorp is currently trading ~A$0.51-$0.52/share. Is there any legal obligation to set a minimum floor price of A$0.51/share?
An Update on HSCEI Index Related ELS Losses for Korean Financials + BOK’s Pivot in 2024
- The local media have started to provide some concrete figures of the amount of losses related to HSCEI related ELS products sold by major Korean banks and securities firms.
- If HSCEI continues to remain at about 5,450 to the end of March 2024, the total losses could rise to nearly 1.6 trillion won, impacting more than 45,000 investors.
- Concerns about HSCEI index related ELS losses have negatively impacted both the major Korean banks and securities companies in Korea in the past 1-2 months.
Fujitsu (6702 JP): Horizon Scandal Blows Up
- The UK Post Office “Horizon Scandal” has blown up, putting Fujitsu’s computer system failure on the front pages and on the agenda of Parliament and Prime Minister Sunak.
- Fujitsu UK has been awarded £6.8bn in public contracts since 2012. The Justice Secretary is now talking about compensation for the enormous financial and personal damage caused.
- Fujitsu’s share price is coming off a new all-time high reached in December. The amount of compensation and loss of potential future contracts is substantial but uncertain.
Benesse (9783) – Through Terms But Maybe Not Enough To Threaten Bump as TOB Launch Approaches
- When the announcement for an MBO for Benesse Holdings (9783 JP) was made in November, they suggested it would take 3 months for approvals to launch. SAMR announced approval Wednesday.
- Japan approval should be (or have been) easy. One might expect this deal to launch prior to “early February”. The stock is trading through terms…. but…
- A reminder that this stock is TOO CHEAP. Bad management means low expectations means a decent premium still ends up at too low a price vs management’s own forecasts.
Aequitas Korea IPOs + Placements Broker Performance 2023
- In this note, we will take a look at broker performance for Korea IPOs and placements in 2023.
- The following dataset includes all Korean IPOs and placements above US$100m, which amounted to a total of seven deals. Given the small number of deals, we’ll keep the note short.
- The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.
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