In today’s briefing:
- Huafa Property (982 HK): Buy With Both Hands
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Nuvoton Could Drop Some More
- Updates on The Couche-Tard Deal for 7&I (3382 JP)
- Toyota Partial Offer Results – What Next?
- Kioxia IPO Early Re-Look – Better Placed This Time Around
- Kioxia & Tokyo Metro: Japan’s Largest IPOs Since 2018 Expected This October
- Huafa Prop (982 HK)’s CCASS Movements: Nothing To See Here
- TSMC (2330.TT; TSM.US): 2024 Top Clients
- KOSPI 200 December Rebalancing: Key Points to Watch for in Proactive Position Build-Up
- Understanding Potential Issues Within SK Group from Hynix’s Kioxia CB Conversion
Huafa Property (982 HK): Buy With Both Hands
- A state-owned Offeror pitching a lifetime high Offer Price – with a solid premium – for an illiquid company? Sounds like a slam dunk.
- Yet property manager Huafa Property Services Group (982 HK) has perennially traded wide to Huafa Industrial Co., Ltd. Zhuhai (600325 CH)‘s terms. This is not justified.
- The Scheme Meeting/SGM is tomorrow (28 August), with payment on (or before) the 30 September. Or a gross/annualised return of 4%/46%. Buy here. Then buy some more.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Nuvoton Could Drop Some More
- With the review period complete, Nuvoton Technology (4919 TT) is a near certain deletion from the Yuanta/P-Shares Taiwan Dividend Plus ETF in September.
- Passive trackers will need to sell 20m shares in Nuvoton Technology (4919 TT). That is over 10% of float and the stock could continue to remain under pressure.
- The potential deletion still appears to be under positioned. There could be renewed selling in the stock over the next few weeks.
Updates on The Couche-Tard Deal for 7&I (3382 JP)
- Today saw the publication of three different articles regarding the Alimentation Couche-Tard (ATD CN) approach and offer to purchase all the shares of Seven & I Holdings (3382 JP)
- The first in the Nikkei said ATD could push offer a high price, even up to ¥8 trillion. The second mentioned debt financing being feasible because of prodigious cash flow.
- The third in Bloomberg noted that 7&i had requested the government upgrade its FEFTA status to “core”, which would lead to a more burdensome/restrictive government approval process.
Toyota Partial Offer Results – What Next?
- Today after the close, Toyota Motor (7203 JP) reported the results of their ¥800bn Tender Offer Buyback, originally intended to repurchase 290.12mm shares from cross-holders.
- In the end, 343.83mm shares were tendered (53.71mm shares more than originally expected, worth about ¥150bn at Tender Price). That creates back-end “issues” which must be considered.
- The resulting supply/demand profile is mixed, but on balance, I expect sees positive demand into the H1 earnings announcement. Watch for another buyback possibly announced then.
Kioxia IPO Early Re-Look – Better Placed This Time Around
- Kioxia Holdings (6600 JP) aims to list in Japan by Oct 2024 at a valuation of over US$10bn, as per media reports.
- Kioxia is a manufacturer and a global leader in flash memory and solid state drives for smartphones, PCs, enterprise servers and data centers
- In this note, we take an early look at the possible listing.
Kioxia & Tokyo Metro: Japan’s Largest IPOs Since 2018 Expected This October
- Kioxia and Tokyo Metro with valuations of ~$10bn and ~$4.6bn are expected to be listed in October 2024 and become the largest Japanese IPOs since Softbank Corp (9434 JP) in 2018.
- Kioxia Holdings (6600 JP) is currently forecasted to fail fast entries of both Global indices due to low IPO free float.
- Tokyo Metro is expected to be added via fast-entry in one Global Index because of higher IPO free float. Forecasted demand of ~$140m is expected on the fifth trading day.
Huafa Prop (982 HK)’s CCASS Movements: Nothing To See Here
- Ahead of Huafa Property Services Group (982 HK)‘s Scheme Meeting tomorrow, the 28th August, 42.57% of shares outstanding moved out of CCASS on the 8th July.
- One argument for Huafa trading wide-ish to terms is due to “suspicious” CCASS moves between the Offer announcement and the vote.
- Some investors even cite the Golden Throat Holdings (6896 HK) debacle. This is not a Golden Throat situation. Not even close. It is decidedly less interesting and benign.
TSMC (2330.TT; TSM.US): 2024 Top Clients
- TSMC’s top 5 clients for 2024 are Apple (AAPL US), Advanced Micro Devices (AMD US, Qualcomm Inc (QCOM US), Mediatek Inc (2454 TT) and NVIDIA Corp (NVDA US).
- Smartphone orders continue to dominate at TSMC, with QCOM and MediaTek being key clients.
- Looking ahead to 2025, Intel Corp (INTC US) is expected to rely more on TSMC, potentially leading to changes in TSMC’s client ranking.
KOSPI 200 December Rebalancing: Key Points to Watch for in Proactive Position Build-Up
- The momentum for getting ahead on positions with KOSPI 200 rebalancing is holding steady. With around 60% of the screening period behind us, it’s time to start preparing our positions.
- The current rebalancing’s screened changes have a relatively lower price volatility, suggesting a stronger chance for more aggressive position build-up now compared to previous rebalancings.
- Trading volumes vary greatly among these changes, affecting their passive impact sizes. Consider using different weights in basket trading instead of equal weights.
Understanding Potential Issues Within SK Group from Hynix’s Kioxia CB Conversion
- Hynix’s potential 15% stake in Kioxia doesn’t violate the 20% rule because KFTC’s mandatory stake rule doesn’t apply to foreign investments.
- SK Group may transfer Hynix’s 15% Kioxia stake to SK Square by splitting Hynix and merging its investment arm with SK Square for future AI investments.
- SK Square may attract more attention than Hynix short-term, as Kioxia’s stake via Hynix could boost market expectations for value transfer to SK Square.
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