In today’s briefing:
- EOFlow (Further) Tests Investor Patience
- Breaking Down Korean Regulators’ Official Details on New Short Selling System
- Denso Corp Placement – Possible Placement by Toyota to Raise US$4.7bn
- Denso Corp (6902 JP): Potential US$4.6bn Placement & Limited Passive Buying
- Another Day Ending in Y, Another Low-Balled Takeover – This Time Glosel (9995)
- Wuxi Lead GDR Listing – Early Look – Another One in the Pipeline, Will Be Net Cash Post-Deal
- Kotak Mahindra Bank – US$1.2 Billion Lockup Release
- Hang Seng Indices (HSI, HSCEI, HS Tech) Recapping the Recaps – A Bit More To Trade
- HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Dec 2023)
- CIMC Vehicles (1839 HK): $7.00/Share Indicative Offer From Parent – Really?!
EOFlow (Further) Tests Investor Patience
- Back on the 25 May, when Medtronic Plc (MDT US) enter into a SPA with EOFlow (294090 KS)‘s CEO, with a follow-on Tender Offer, the whole construct looked pretty clean.
- Then in August Insulet Corp (PODD US) launched its lawsuit, which in hindsight, should have been expected. Then earlier this month, news surfaced concerning a stock-backed loan to the CEO.
- Now the CEO is selling, presumably to repay his collateralized loan. Shares are down 38% since the resumption of trading, and are now at a whopping 122% spread to terms.
Breaking Down Korean Regulators’ Official Details on New Short Selling System
- Concerning the newly imposed 90-day mandatory repayment period for institutional investors, the elimination of the recall risk during this period is not included in this improvement plan.
- The right to re-establish the same short-selling position after the 90-day repayment period is unlimited. We should pay attention to the potential of this creating new trading events.
- Institutions borrowing stocks from overseas are not subject to the 105% collateral ratio. However, everyone is subject to the 90-day repayment period, even for investors who borrow stocks from overseas.
Denso Corp Placement – Possible Placement by Toyota to Raise US$4.7bn
- As per Reuters, Toyota Motor (7203 JP) could look to sell up to 10% of Denso Corp (6902 JP) to raise around US$4.7bn before the end of the year.
- Toyota is the company’s largest shareholder and its largest customer.
- In this note, we will talk about the deal dynamics.
Denso Corp (6902 JP): Potential US$4.6bn Placement & Limited Passive Buying
- There could be a US$4.6bn secondary placement in Denso Corp (6902 JP) before year-end as Toyota Motor (7203 JP), Toyota Industries (6201 JP) and Aisin Corp (7259 JP) unwind cross-holdings.
- Denso Corp (6902 JP) was down 4.85% yesterday (and even more intra-day) and the stock could remain under pressure for the next few weeks.
- There will be limited passive buying in conjunction with the secondary offering and active investors will need to buy a lot of stock.
Another Day Ending in Y, Another Low-Balled Takeover – This Time Glosel (9995)
- Today, Macnica Fuji Electronics Hol (3132 JP) (Macnica Holdings) announced that it would launch a tender offer to buy 100% of Glosel (9995 JP), a semiconductor trading company.
- Glosel is special because it has three main assets. 1) 61% of net assets are inventory (<3mo), 2) 34% of net assets are net receivables (<3mos), 3) 8+% is securities.
- For that, Glosel’s Board decided 0.71x book was OK. Nah. The register is reasonably wide open, and this is a delayed start. Someone might get noisy, but < 50/50 bet.
Wuxi Lead GDR Listing – Early Look – Another One in the Pipeline, Will Be Net Cash Post-Deal
- Wuxi Lead Intelligent Equipmen (300450 CH) is looking to raise around US$300m in its upcoming Switzerland GDR listing.
- As per media reports, Wuxi Lead was said to be looking to raise US$495m via a Swiss GDR issuance, having secured approval to sell up to 78.3m shares.
- Given the decline in its share price over the year, the eventual deal size could come to around US$300m as of its current last close.
Kotak Mahindra Bank – US$1.2 Billion Lockup Release
- In Jun 2023, CPPIB raised around US$750m via selling a 1.6% stake in Kotak Mahindra Bank (KMB IN). Prior to that it had sold a similar amount in Mar 2022.
- CPPIB will be released from its placement linked lockup early next month.
- In this note, we will talk about the lockup dynamics and past deals performance.
Hang Seng Indices (HSI, HSCEI, HS Tech) Recapping the Recaps – A Bit More To Trade
- The final datapoints for the December Hang Seng Indices rebalances were recorded today, slightly altering the initially expected weights and flows.
- The expected flows have slightly increased since the initial estimates on 15 then 17 November.
- Across all three indices, I see a net total of roughly HK$13.4bn a side to trade.
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Dec 2023)
- The December rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
- Li Auto (2015 HK) will have the largest inflows due to the HSI inclusion while Xiaomi (1810 HK) will have the largest outflow due to HSTECH capping.
- There will be passive selling in HSBC Holdings (5 HK) for yet another rebalance due to capping of the stock in the Hang Seng Index (HSI INDEX).
CIMC Vehicles (1839 HK): $7.00/Share Indicative Offer From Parent – Really?!
- After CIMC Vehicle Group Co Ltd (1839 HK) was suspended yesterday pursuant to Hong Kong’s Takeover Code, the expectation was an H-share Offer from its parent, SOE-backed CIMC Group.
- CIMC subsequently announced an indicative Offer yesterday evening, from its parent, at a $7.00/share for each H-share, a pitiful 8.6% premium to last close. There is no concurrent A-share Offer.
- CIMC traded around $7.00 late September, and comfortably traded through the indicative terms for most of July.
💡 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
