In today’s briefing:
- Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes
- KKR Deal for Alps Logistics (9055) Appears Imminent
- China Traditional Chinese Medicine (570 HK): Evaluating Deal-Break Risks
- HD Hyundai Marine Solution (443060 KS): Nearing KOSPI200 Index Inclusion in June
- Infocom (4348 JP): Rumoured Tender Offer as Teijin Seeks to Exit
- Logisteed/KKR Bid BIGLY for Alps Logistics (9055). A Gobsmacking Price/Multiple
- Alps Logistics (9055 JP): KKR’s Knockout Pre-Conditional Offer at JPY5,774
- TOPIX Inclusions: Who Is Ready (May 2024)
- HK CEO & Director Dealings (9 May 2024): Lawrence Adds More Melco; Ng Adds More Sino Land
- Netmarble Plans to Sell 2.6% Stake in HYBE Through PRS (Price Return Swap).
Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes
- The review period for the Nikkei 225 (NKY INDEX) September rebalance ends in July. There could be three changes at the rebalance with sector balance in focus for the additions.
- Depending on the changes, passive trackers will need to buy between 5-16x ADV (10.1%-24% of real float) on the inclusions and sell between 4-42x ADV on the deletions.
- Fast Retailing (9983 JP) will be capped to 10% of the index weight while Tokyo Electron (8035 JP) is also close to the 10% cap.
KKR Deal for Alps Logistics (9055) Appears Imminent
- There was a news article I missed in late February saying Alps Alpine (6770 JP), parent of Alps Logistics (9055 JP) was in the process of selling the logistics unit.
- A deal made sense for a strategic given the upcoming “2024 Problem”. Pre-close, headlines blared, the stock popped 12%, now we’re at double the end-February price.
- Late in the evening,Alps Logistics said it had received a bid from Logisteed but nothing had been decided. This morning we have a few more details, but nothing concrete
China Traditional Chinese Medicine (570 HK): Evaluating Deal-Break Risks
- On 21 February, China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
- The wide gross spread (7.0%) reflects risks around the re-rating of peers, the slow pace of satisfying the pre-condition, the completion timetable and Ping An’s blocking stake.
- The key risk is the deal close timing due to the slow pace of regulatory approvals, which increases the chance that the vote will held after the August interim.
HD Hyundai Marine Solution (443060 KS): Nearing KOSPI200 Index Inclusion in June
- After a 96.5% gain on listing day, HD Hyundai Marine Solution (443060 KS) is very close to levels needed for Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) inclusion in June.
- HD Hyundai Marine Solution needs to outperform the 50th ranked stock in the KOSPI2 INDEX by 11.4% on average over the next 15 trading days to be added to the index.
- Retail investors sold 25% of their allocation on listing day while foreign investors sold 22% of their IPO allocation with local institutions mopping up the shares.
Infocom (4348 JP): Rumoured Tender Offer as Teijin Seeks to Exit
- Bloomberg reports that Teijin Ltd (3401 JP) wants to sell its 55% stake in Infocom Corp (4348 JP). The rumoured bidders are Sony Corp (6758 JP), Blackstone and KKR.
- Based on precedents, the offer structure will likely be structured such that Teijin provides an irrevocable NOT to accept but vote in favour of share consolidation at the EGM.
- Bloomberg suggests that Infocom could be valued at JPY200 billion. If this refers to market cap, the tender offer is JPY3,472, a 16.5% premium to the last close.
Logisteed/KKR Bid BIGLY for Alps Logistics (9055). A Gobsmacking Price/Multiple
- In late February, a specialty media outlet noted Alps Logistics (9055 JP) was up for sale. I missed that. Yesterday pre-close, a headline crossed the wires. A deal was imminent.
- Nikkei overnight said “¥150bn+ market cap”. I thought KKR might slightly overpay the Hitachi Transport System (9086 JP) multiple paid. That meant +13% today was full-ish. I was wrong.
- KKR is paying ¥5,774 to minorities, and about ¥4,084-ish to the parent, who is reinvesting at ¥5,774. This is a total knock-out price paid. HUGE MINORITY WIN.
Alps Logistics (9055 JP): KKR’s Knockout Pre-Conditional Offer at JPY5,774
- Alps Logistics (9055 JP) recommended a pre-conditional tender offer from a KKR & Co (KKR US) subsidiary at JPY5,774, 32.7% and 69.8% premium to the last close and undisturbed price, respectively.
- The pre-condition is approvals under competition laws of Japan, China, the EU, South Korea and Vietnam. The tender offer is expected to start in mid-August.
- The offer represents an all-time high and is a knockout bid. While the timing of regulatory approvals is a risk, the transaction is a done deal.
TOPIX Inclusions: Who Is Ready (May 2024)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- Dozens of companies have been able to meet the key Section Transfer requirements on paper for several months but there have been no TOPIX Inclusions announcements in 2024 so far.
- However, there are some pre-event candidates we believe are worth monitoring as they have previously confirmed their desire to move to the Prime Market.
HK CEO & Director Dealings (9 May 2024): Lawrence Adds More Melco; Ng Adds More Sino Land
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- The key stocks mentioned in this regular insight include Melco International Development (200 HK), Sino Land Co (83 HK), and ZJLD Group (6979 HK).
Netmarble Plans to Sell 2.6% Stake in HYBE Through PRS (Price Return Swap).
- After the market close on 9 May, Netmarble announced that it plans to sell 2.6% stake in HYBE for 219.9 billion won.
- The transaction is based on PRS (price return swap) basis. Previous to this deal, Netmarble sold 2.5 million shares (about 6%) of HYBE shares in November 2023.
- We continue to remain negative on HYBE including on this deal involving Netmarble’s plan to sell additional 2.6% stake in HYBE.
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