In today’s briefing:
- ESR (1821 HK): Sell First, Ask Questions Later
- 7&I (3382 JP) – A York Holdings Deal And Warren Buffett?
- Sanrio (8136 JP) Placement: Potential Global Index Migration Leads to Interesting Dynamics
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Last-Second Changes to the Last-Minute Changes
- NTT (9432 JP) And SBI Sumishin NetBank (7163 JP)? Maybe. Maybe Not. Seven Bank A Better Idea
- Hulic Co (3003 JP) Placement: One Big Price Drop Could Lead to Another
- A Proxy Fight for Korea Zinc in January 2025
- Seven&I (3382): Who Will Be the Greater Fool?
- Korea Zinc Saga Turning into a Comedy Show: MBK’s Speculative Move & How It’s Shaping Our Trades
- Kioxoa Pre-IPO – Peer Comparison
ESR (1821 HK): Sell First, Ask Questions Later
- Back on the 13th May 2024, ESR Group (1821 HK) announced a delisting proposal from a consortium of investors formed by Starwood Capital Operations, Sixth Street Partners, and SSW Partners.
- The consortium initially controlled 15.7%. Warburg (~14%) and ESR founders (~7.4%) tipped in their stakes. As did Qatar (3%) earlier this month, bringing the collective total to 39.9%.
- No terms have been made public. Yesterday a Bloomberg article flagging “an agreement also might not be reached” saw shares freefall. Plus Capital Group recently trimmed its stake.
7&I (3382 JP) – A York Holdings Deal And Warren Buffett?
- The Seven & I Holdings (3382 JP) to rid itself of control of the Ito-Yokado, York Benimaru, Akachan Hompo, and Denny’s Japan businesses in York Holdings proceeds apace.
- The First Round of bids is due tomorrow, apparently, and all manner of bidders have assembled.
- This leads to the question of a deal for the rest of 7&i. If a TradingCo is a natural co-investor for the Ito family (or ACT), so is Berkshire Hathaway.
Sanrio (8136 JP) Placement: Potential Global Index Migration Leads to Interesting Dynamics
- Overnight, Sanrio (8136 JP) announced a placement of 25.87m shares to unwind crossholdings and improve corporate value. There is an overallotment option for another 3.88m shares.
- There will be limited passive buying in the short-term and the shares offered is a large percentage of real float of the stock.
- However, Sanrio (8136 JP) is the highest ranked non-constituent stock in a global index universe and a drop in the stock price could be used to accumulate positions.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Last-Second Changes to the Last-Minute Changes
- There are now new changes forecast for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December for a total of 8 inclusions and 7 deletions.
- Constituent changes along with capping changes will lead to a one-way turnover of 21.8% and in a one-way trade of TWD 75.8bn (US$2.33bn).
- The potential changes had a big one-day move yesterday and we expect similar moves over the next couple of days.
NTT (9432 JP) And SBI Sumishin NetBank (7163 JP)? Maybe. Maybe Not. Seven Bank A Better Idea
- An article in Japanese weekly magazine Bunshun this morning sent shares inSBI Sumishin Net Bank (7163 JP) limit up +17% with a headline that NTT Docomo was interested to buy.
- Without access to the article, I can’t go deep, but the base concept is that NTT Docomo is “worried” about KDDI (which has a bank, as does Softbank Corp)
- It is not clear how serious it is, SBI Sumishin is super-expensive, and buying a bank isn’t the same as buying a company. Hmmm…
Hulic Co (3003 JP) Placement: One Big Price Drop Could Lead to Another
- Overnight, Hulic Co Ltd (3003 JP) announced a placement of 85.37m shares to unwind crossholdings and improve corporate value. There is an overallotment option for another 12.8m shares.
- There will be limited passive buying in the short-term and the number of shares offered is a very large percentage of real float of the stock.
- A price drop of 20% or more puts Hulic Co Ltd (3003 JP) at risk of deletion from a global index and could lead to a further price drop.
A Proxy Fight for Korea Zinc in January 2025
- There is likely to be a proxy fight for the control of Korea Zinc (010130 KS) between MBK/Young Poong alliance and Chairman Choi/Bain Capital alliance in January 2025.
- Young Poong Precision announced that it will acquire 39,254 shares of Korea Zinc. Post this purchase, Young Poong Precision will own a 2.11% stake in Korea Zinc (up from 1.92%).
- FSS Governor Lee Bok-Hyun mentioned that the FSS is seriously reviewing a potential accounting issue related to environmental pollution at Young Poong.
Seven&I (3382): Who Will Be the Greater Fool?
- 7&I traded at less than 5x reported EV/EBITDA consistently for roughly 4 years straight, and no one seemed to care or notice.
- Now that it trades close to 9x, there is an overflow of eager financiers and a mile-long line of analysts who will tell you that it is still undervalued.
- This is the stock market equivalent of duct tape and a banana.
Korea Zinc Saga Turning into a Comedy Show: MBK’s Speculative Move & How It’s Shaping Our Trades
- Lee Bok-hyun, head of the Financial Supervisory Service, unexpectedly voiced concerns about MBK winning Korea Zinc’s management battle, catching everyone off guard.
- The key question is how Michael ByungJu Kim will handle government pressure, with MBK possibly aligning with the opposition if the Democratic Party pushes for commercial law reform.
- Korea Zinc now becomes a proxy war over governance reform. Watch MBK’s political stance, as it could drive the stock higher, especially if Michael teams up with the opposition.
Kioxoa Pre-IPO – Peer Comparison
- Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- We have looked at the company’s past performance in our earlier notes. In this note we undertake a peer comparison.
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