In today’s briefing:
- Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals
- KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!
- YES Bank Lock-Up Expiry: Forced Sellers, Overhang & Index Implications
- HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (March 2023)
- ANA and NYK to Trade NCA, So JAL/ANA GTG
- TOPIX Inclusions: Who Is Ready (Mar 2023)
- K-Pop Battle, Round 2: Kakao’s Tender Offer For S.M. Entertainment
- InvoCare (IVC AU): TPG’s A$12.65/Share NBIO
- InvoCare (IVC AU): TPG’s Non-Binding Offer
- Tencent Meituan Dividend – The US$17bn Overhang Is Almost Here – Lesson from JD.com
Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals
- Japan Post Holdings (6178 JP) plans to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
- We have looked at the deal in our past note, Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback.
- In this note, we talk about the updates since our last note and have a look at some of the past deals.
KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!
- Two thirds of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX).
- One-Way turnover is estimated at 3.5%. Impact on the expected deletions is a lot higher than the impact on the expected inclusions and shorts are building up on the deletes.
- Since the start of the review period, the potential inclusions have outperformed the potential deletions by nearly 50% and the KOSDAQ 150 Index (KOSDQ150 INDEX) by over 20%.
YES Bank Lock-Up Expiry: Forced Sellers, Overhang & Index Implications
- The lock-up on nearly 9.4bn shares of Yes Bank (YES IN) expires on 13 March. Most of that is from the banks that helped in the recapitalisation in March 2020.
- There will be forced sellers as soon as the lock-up ends, and there will be other sellers that will want to sell.
- The forced and discretionary selling will be offset to a very small extent by inflows from passive trackers in May/June as the free float for the stock increases.
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (March 2023)
- The March rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
- The largest inflows will be on Li Auto (2015 HK), Meituan (3690 HK), XPeng (9868 HK), JD.com (9618 HK), Alibaba (9988 HK), BYD (1211 HK) and Kuaishou Technology (1024 HK).
- The largest outflows will be on Tencent (700 HK), HSBC Holdings (5 HK), Baidu (9888 HK), Xiaomi Corp (1810 HK), NetEase (9999 HK), CNOOC (883 HK) and SMIC (981 HK).
ANA and NYK to Trade NCA, So JAL/ANA GTG
- ANA announced their FY23-25 Mid-Term Corporate Strategy last month. In it, a plan to increase cargo.
- Today, Ana Holdings (9202 JP) and Nippon Yusen Kk (9101 JP) announced ANA would take over NYK sub Nippon Cargo Airlines 1 October 2023 – price and method TBD.
- This would add ~45-50% to ANA’s cargo volume, and more to its capacity. But it means NYK sells cheap OR it means a chunk of ANA cash/stock. Overhang.
TOPIX Inclusions: Who Is Ready (Mar 2023)
- 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.
- In February, names which appeared in our “B” list such as Amvis Holdings Inc (7071 JP) and AXXZIA Inc (4936 JP) announced they would be moving to the Prime Market.
- In this insight, we take a look at updated lists, the price performance history of those baskets, and other interesting trades in the TOPIX index space.
K-Pop Battle, Round 2: Kakao’s Tender Offer For S.M. Entertainment
- Fresh after the courts rejected new share issuance, Kakao (035720 KS) has launched an Offer for S.M.Entertainment (041510 KS), less than a week after HYBE (352820 KS)‘s deal closed.
- Kakao, holding 4.9%, is seeking to lift its stake to ~40% via a tender offer at ₩150,000/share, a 25% premium to HYBE’s offer price.
- The key question is – will HYBE counter? I would not be so sure.
InvoCare (IVC AU): TPG’s A$12.65/Share NBIO
- Invocare Ltd (IVC AU) has received an unsolicited, preliminary, non-binding indicative offer from TPG Global to acquire the company at A$12.65/share in cash.
- TPG has also acquired 17.8% of the shares in Invocare Ltd (IVC AU) via a combination of stock and derivatives.
- With the company now in play, there could be competing offers. Already owning 17.8% of the company, TPG is now invested in ensuring they gain control.
InvoCare (IVC AU): TPG’s Non-Binding Offer
- PE outfit TPG has taken a 17.8% stake in InvoCare Ltd (IVC AU), Australia’s leading funeral services provider, and also pitched a A$12.65/share non-binding indicative Offer via a Scheme.
- The Indicative proposal is subject to the completion of satisfactory due diligence, and FIRB.
- InvoCare, which has struggled to generate consistent profits in recent years, is mulling the proposal. Pricing is around the Covid cliff.
Tencent Meituan Dividend – The US$17bn Overhang Is Almost Here – Lesson from JD.com
- On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
- At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares. Its value has since declined to US$17bn.
- In this note, we talk about the implications of the deal and what one can glean from looking at the previous dividend payout for JD.com.
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