In today’s briefing:
- Japan Post Bank (7182 JP) Announces Its Re-IPO – Big Offering, Complicated but Big Index Flows
- Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback
- Japan Post Bank (7182 JP): BIG Offering Supported by Buybacks & Passive Flow
- Japan Post Bank (7182 JP) ¥70bn ToSTNeT-3 Buyback
- Kansai Paint (4613 JP) Secondary Offering & Buyback and All the Subsequent Flows
- Shorting Entry Point on Ecopro BM with KODEX Battery ETF Rebalancing on March 10
- TOPIX Index Upweights: Final Predictions for The “The Big April Basket” 2023
- Astra International (ASII IJ) – Rewarding Investors for an Extraordinary Year
- End of Mandatory Lock-Up Periods for 35 Companies in Korea in March 2023
- KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms
Japan Post Bank (7182 JP) Announces Its Re-IPO – Big Offering, Complicated but Big Index Flows
- Japan Post Bank (7182 JP) has announced the mooted offering by Japan Post Holdings (6178 JP) whereby they will sell 29% of the bank to go from 89% to 60%.
- There are two buybacks – one pre offering and one after – which is an attempt to mitigate impact. This creates interesting but complicated strategy possibilities. Lots of details here.
- Big picture, this is a Very Big Offering at ¥1.236trln at today’s close including greenshoe. 80/20 dom/international. A TOUGH sell. 1.089bn shares is 4x current float.
Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback
- Japan Post Holdings (6178 JP) plans to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
- Initial news of the deal broke last week, and we had a look in, Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang.
- In this note, we talk about the deal structure and impact.
Japan Post Bank (7182 JP): BIG Offering Supported by Buybacks & Passive Flow
- Japan Post Holdings (6178 JP) is looking to reduce its stake in Japan Post Bank (7182 JP) from 89% to 60%. That is over US$9bn at the last close.
- The placement is supported by buybacks (ToSTNeT-3 and on-market) that will absorb some of the offering. Then there is the passive buying that will absorb a third of the offering.
- One of the key short-term supports will be the exercise of the over-allotment of the Japan offering. But that will require persuading retail investors to buy into the offering.
Japan Post Bank (7182 JP) ¥70bn ToSTNeT-3 Buyback
- As expected, Japan Post Bank (7182 JP) has announced their ToSTNeT-3 buyback of ¥70 billion on Day 1 of the potential TN-3 Buyback period.
- Also as somewhat expected, investors and traders pushed up the stock price today after the news there would be a buyback, hoping to buy then sell, or short today’s close.
- Japan Post Holdings (6178 JP) will offer shares. Others obviously will too. How this works and what you have to watch out for discussed below.
Kansai Paint (4613 JP) Secondary Offering & Buyback and All the Subsequent Flows
- Today after the close, Kansai Paint (4613 JP) announced a passel of crossholders would sell 26.2mm shares in a Secondary Offer. They also announced a buyback.
- The buyback, spending up to ¥12bn to buy back up to 8.2mm shares, starts after the Offering is delivered, and extends until 15 March 2024.
- This offering reduces cross-holder “strategic holdings” by a third. This will impact FFW. Complicated index impacts will occur over time.
Shorting Entry Point on Ecopro BM with KODEX Battery ETF Rebalancing on March 10
- Ecopro BM’s weight has expanded to 22%. Since the probability of receiving a 15% cap is virtually 100%, it will inevitably undergo a weight change of up to nearly 7%p.
- If the ongoing rally subsides before March 10th and returns to the January DTV level, the price impact could surge up to 0.3-0.4x daily for three trading days.
- This seems to be a sufficient level for a shorting entry point. It may be worth considering an outright short position on Ecopro BM or Long Short with SK Innovation.
TOPIX Index Upweights: Final Predictions for The “The Big April Basket” 2023
- Some low liquidity stocks in the TOPIX Index carry a liquidity factor of 0.75x resulting in their actual index weights being smaller than their default weights.
- These names are reviewed every April and if the liquidity factor of a stock gets removed, the stock will enjoy buying flows from passive trackers of TOPIX.
- In this insight, we take a look at Quiddity’s final predictions for the names that are likely to see their Liquidity Factors removed in April 2023.
Astra International (ASII IJ) – Rewarding Investors for an Extraordinary Year
- Astra International’s results reflected its exposure to commodities, especially coal, through heavy equipment and mining through United Tractors (UNTR IJ) but most divisions booked growth as the economy recovered.
- The company’s core auto and financing business made much more than half of its profits and also contributed to its growth with a slower performance from agri-business and construction.
- Astra International (ASII IJ) announced a generous 85%-dividend payout to reward investors for its coal exposure in 2022, implying a 10% dividend yield. Valuations remain significantly below historical averages.
End of Mandatory Lock-Up Periods for 35 Companies in Korea in March 2023
- We discuss end of the mandatory lock-up periods for 35 stocks in Korea in March 2023, among which 8 are in KOSPI and 27 are in KOSDAQ.
- These 35 stocks on average could be subject to further selling pressures in March and could underperform relative to the market.
- Among these 35 stocks, the top 5 market cap stocks include Nh Investment & Securities, WCP, Bionote, Jeio, and Dreamtech.
KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms
- The review period for the March rebalance ended on 31 January, changes will be announced in the next few days and implemented at the close of trading on 9 March.
- We forecast one add/delete for the Secondary Battery Index and Game Index, and a couple of adds/deletes for the BBIG Index. There will be a lot of capping changes.
- The largest inflows are expected on Posco Chemical (003670 KS) and Douzone Bizon (012510 KS); the largest outflows are expected on SK Innovation (096770 KS) and KMW (032500 KS).
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