In today’s briefing:
- Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges
- Fuji Soft (9749) – Much Better Governance Process But The Stock Has Run Too Far
- Japan – Increasing Shorts on Some Interesting* Stocks; Positioning Appears Light
- Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX
- Merger Arb Mondays (15 Jan) – Shinko Electric, Benefit One, T&K Toka, Taisho, IJTT, IRC, Weiqiao
- EQD | Nikkei 225 WEEKLY Lift Off: Can It Go Higher?
- KOSPI200 Index Rebalance Preview: Four Potential Changes in June
- ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance
- Ohayo Japan | Nikkei Outpaces Global Stocks; Busy Week Ahead
- Costa Group (CGC AU): Potential ASX200 Replacements
Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges
- Fuji Soft Inc (9749 JP) has disclosed that in response to a request from 3D Investment Partners, it has received non-binding privatisation proposals from several private equity funds.
- A privatisation proposal would facilitate the exit of 3D, the largest shareholder representing 21.45% of outstanding shares, which has waged an activist campaign since 2022.
- A binding privatisation proposal is challenging as the shares have hit a ten-year high, lofty multiple, and the Board seems to prefer its corporate value enhancement measures.
Fuji Soft (9749) – Much Better Governance Process But The Stock Has Run Too Far
- After 3D Investment Partners bought a large slug of Fuji Soft Inc (9749 JP) in early 2022, the company started a review of governance and capital allocation.
- The company updated investors in August, and bought in 4 listed subs in November-December 2023. The August update suggested a Q1 2024 decision on use/ownership of real estate.
- The Final Report is due in a month. In the meantime, the stock rallied Friday off a news article suggesting the Board was reviewing take-private proposals. Yes, but…
Japan – Increasing Shorts on Some Interesting* Stocks; Positioning Appears Light
- Some stocks have continued to underperform the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios next month.
- Stocks that were expected to be deleted (but could now be safe) have outperformed the Nikkei 225 (NKY INDEX) over the last couple of weeks.
- There has been two-way flow in a lot of stocks with market participants increasing and covering short positions as the stock prices have moved around.
Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX
- The review period for the next rebalance of a global index kicks off this week and that is where a lot of eyes will be focused.
- There were big inflows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) while there were redemptions from the Hang Seng H Share Index ETF (2828 HK).
- Inflows continue for iShares Emerging Markets ex China (EMXC US) while there were outflows from iShares ACWI ETF (ACWI US).
Merger Arb Mondays (15 Jan) – Shinko Electric, Benefit One, T&K Toka, Taisho, IJTT, IRC, Weiqiao
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Hollysys Automation Technologies (HOLI US), Shinko Electric Industries (6967 JP), JSR Corp (4185 JP), Probiotec Ltd (PBP AU), Irc Ltd (1029 HK), Orecorp Ltd (ORR AU).
- Lowest spreads – Tietto Minerals Ltd (TIE AU), T&K Toka Co Ltd (4636 JP), Pact Group Holdings (PGH AU), Benesse Holdings (9783 JP), Taisho Pharmaceutical Holdin (4581 JP).
EQD | Nikkei 225 WEEKLY Lift Off: Can It Go Higher?
- The Nikkei 225 INDEX experienced a 1-week explosive rally, last week, reaching nearly +6.6% higher than the previous week’s Close.
- The index is now very overbought, can it continue to rise next week? and and how much higher can it go?
- Go SHORT in the 36000-38350 price area, but the trade is not without risk.
KOSPI200 Index Rebalance Preview: Four Potential Changes in June
- Less than halfway through the review period, we see four changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
- The impact on the potential inclusion ranges from 0.14-6 days of ADV while the impact on the potential deletions varies from 3.6-12 days of ADV.
- There are small shorts on the potential inclusions while short interest on the potential deletions varies from 5-10 days of ADV and 1.7-8.2% of free float.
ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- On the IPO front, a number of large filings over the holidays is somewhat positive for 2024 prospects.
- On the placement front, 2024 picked up where 2023 left off, with Samsung Electronics (005930 KS) leading the way.
Ohayo Japan | Nikkei Outpaces Global Stocks; Busy Week Ahead
- In the upcoming week, market focus includes U.S. retail sales, bank earnings, Davos discussions on global economic challenges, China’s GDP figures, and volatile oil prices amid geopolitical tensions.
- Fujitsu faces scrutiny in Britain regarding potential compensation for post office operators falsely accused of embezzlement due to glitches in its accounting system from the 1990s into the 2010s.
- Yaskawa’s 9M financials show a 6% YoY net profit decline at 34bn yen. Motors and robotics, witnessed profit growth despite Chinese economic uncertainties. Orders may be bottoming
Costa Group (CGC AU): Potential ASX200 Replacements
- The Scheme Meeting for PSP’s acquisition of Costa Group Holdings (CGC AU) will be held on 30 January and Costa Group could stop trading after the close on 8 February.
- Strike Energy (STX AU), SiteMinder (SDR AU) and Audinate (AD8 AU) are potential inclusions to the S&P/ASX 200 (AS51 INDEX) at an ad hoc rebalance.
- For the stocks that are not added at the ad hoc rebalance, there is a very high probability of S&P/ASX 200 (AS51 INDEX) inclusion at the March rebalance.
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