In today’s briefing:
- Fuji Soft (9749 JP) – The Fine Print Is Worth Reading
- Shinko Electric (6967 JP) Takeover – THIS Is a Dip to Buy
- Hyundai Motor India IPO: How Far to Fast Entry?
- Tokyo Metro (9023 JP): Listing Tomorrow; Div Yield and Index Flows Should Take It Higher
- Tokyo Metro IPO Trading – Robust Demand for Quality Asset
- The Tokyo Metro (9023 JP) IPO And Aftermarket – What To Look For
- International Games System (3293 TT): Positioning & Potential Passive Buying
- Australia: Potential Passive Selling in November Will Be Big
- Shinko Electric (6967 JP): A Casualty of the China TCM Deal Break
- China Resources Beverage IPO Trading – Still a Bit of Fizz Left
Fuji Soft (9749 JP) – The Fine Print Is Worth Reading
- On 11-Oct, Bain submitted a binding proposal for Fuji Soft Inc (9749 JP). On 15-Oct, FSI acknowledged, but questioned the Nozawa family commitment. Founder Nozawa wrote letters the 17th.
- O 18-Oct, FSI reiterated support for the KKR First Tender in a late night drop. It included fine print, but no media coverage. Today, FSI filed a Target Opinion Amendment.
- That filing included yet more fine print not in the public filing Friday. And KKR extended. The new fine print is nuanced. But worth reading.
Shinko Electric (6967 JP) Takeover – THIS Is a Dip to Buy
- Over the last few days, Shinko Electric Industries (6967 JP) shares have dipped lower than the previous standard trading range.
- I expect this weakness is related to investors in other deals deciding to sell this deal too. I believe it is not related to Shinko specifically.
- For that, while gap risk remains somewhat high, I still see break risk as low and see this as a great opportunity to buy the dip.
Hyundai Motor India IPO: How Far to Fast Entry?
- Hyundai Motor (005380 KS) raised INR 279bn (US$3.3bn) by selling some of its stake in Hyundai Motor India (1342Z IN), valuing Hyundai India at INR 1,593bn (US$18.95bn).
- The anchor investor book was fully subscribed. The non-institutional and retail books were undersubscribed, so institutions got more stock. And that changes the free float estimates for one global index.
- Even with the higher float, Hyundai Motor India (1342Z IN) is unlikely to get Fast Entry to one global index later this month. Index inclusions should commence in February 2025.
Tokyo Metro (9023 JP): Listing Tomorrow; Div Yield and Index Flows Should Take It Higher
- Tokyo Metro (9023 JP) priced its IPO at the top end (JPY 1200/share), raised JPY 348.6bn (US$2.3bn) and the company is valued at JPY 697bn (US$4.62bn).
- The stock starts to trade today, and the grey market is indicating an open 20% higher. Not surprising considering that the IPO was heavily oversubscribed.
- Even at a price of JPY 1440/share, the estimated dividend yield is 2.78% and that should keep the stock supported. Index inclusions will result in more buying next week.
Tokyo Metro IPO Trading – Robust Demand for Quality Asset
- Tokyo Metro (9023 JP)‘s shareholders raised around US$2.4bn in its Japan IPO.
- Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
- We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.
The Tokyo Metro (9023 JP) IPO And Aftermarket – What To Look For
- The Tokyo Metro (9023 JP) IPO is one of the largest IPOs of recent years, well-flagged, and it is hot hot hot! A super stable, well-known, well-respected, service provider.
- There are numerous attractions but I expect people have not thought too deeply about the demand and supply dynamics of different holder types. It’s worth thinking about.
- This was priced “cheap” but everyone knows that so there may be flippers. This is probably more Japan Post Bank than Japan Post Insurance.
International Games System (3293 TT): Positioning & Potential Passive Buying
- International Games System (3293 TT) could be added to a global index at the end of November and there will be a lot of buying in the stock.
- The big rally in the stock has led to International Games System (3293 TT) trading expensive to its regional peers.
- There has been an increase in cumulative excess volume over the last month. But there could still be more to go over the next week.
Australia: Potential Passive Selling in November Will Be Big
- There could be two or three Aussie names that are deleted from global passive portfolios in November. In each of the cases, there is a lot to sell from passives.
- One name is very high probability while the deletion of the others depends on the day of the week chosen.
- Shorts have been built up on the stocks and there are strong indications of positioning. But the extent of the positioning varies, and the stocks could have differently.
Shinko Electric (6967 JP): A Casualty of the China TCM Deal Break
- At first glance, the Shinko Electric Industries (6967 JP) and China TCM merger arb has little or no similarities regarding the region, precondition, sector, type of offeror, or offer structure.
- The aftermath of China Traditional Chinese Medicine (570 HK) has resulted in funds resizing well-held merger arb positions, mainly long-dated names with tail event risks. This has increased the Shinko spread.
- Shinko’s tail event risk (no SAMR approval) remains low. Timing remains the primary risk, as a delay is possible. At the last close, the gross/annualised spread was 8.9%/29.2%.
China Resources Beverage IPO Trading – Still a Bit of Fizz Left
- China Resources Beverage (2460 HK) raised around US$750m in its Hong Kong IPO, after pricing at the top-end.
- China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
- We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.
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