In today’s briefing:
- JSR (4185 JP) Takeover – Why So Wide? FUD and Flows
- Celltrion Group Merger Announcement in July & Oversold Post Disappointing Exclusion by OptumRX?
- S&P/ASX Index Rebalance Preview: Potential Changes in September
- Solactive Global Uranium & Nuclear Components Index Rebalance Preview: Potential Changes
- Plus Alpha Consulting (4071 JP) – ¥30bn Offer Leads to ¥5bn TOPIX Inclusion
- July TOPIX FFW Rebal – Bigger Than Expected
- Shougang Fushan Resources (639 HK): Partial Offer at HK$2.40
- Genda IPO – Dreams of Reviving the Domestic Arcade Industry with a Roadmap of Doing so as Well
- Korea – A Look at Ecopro, Kumyang & JYP Entertainment
- Ohayo Japan| Fed Job Done-Inflation Over, Stocks Rally; NUGGET: BayCurrent – To Leap from DX to AI ?
JSR (4185 JP) Takeover – Why So Wide? FUD and Flows
- In the last week of June, Japanese government-affiliated Japan Investment Corp (“JIC”) announced it would take over JSR Corp (4185 JP). A “surprise” but perhaps not totally.
- It traded tight, then it traded back out. Then worse. Then worse again. There were good reasons for this. There were perhaps less good reasons too.
- FUD and Flows mean that it is likely to continue to trade wide for the near future.
Celltrion Group Merger Announcement in July & Oversold Post Disappointing Exclusion by OptumRX?
- Invest Chosun recently reported that the three Celltrion Group companies including Celltrion Inc, Celltrion Healthcare, and Celltrion Pharm are close to announcing a merger in July.
- Although Celltrion was not included this time as suppliers of Humira biosimilar products by OptumRX, there is still a potential for Cigna Express Scripts to include Celltrion’s product this year.
- We think Celltrion Inc and Celltrion Healthcare’s share prices are oversold.
S&P/ASX Index Rebalance Preview: Potential Changes in September
- We forecast 22 changes across the ASX50 Index, ASX100 Index, S&P/ASX 200 (AS51 INDEX) and ASX300 Index at the September rebalance.
- Some of the changes are high probability while others are close to cutoffs. The impact of passive trading will be pretty large on a lot of stocks.
- Short interest on the potential deletes indicates some pre-positioning but there should still be a fair bit more to do.
Solactive Global Uranium & Nuclear Components Index Rebalance Preview: Potential Changes
- Based on prices and turnover from 10 July, there could be one deletion from the index in July. Plus there will be capping and float changes.
- There are four stocks that meet the inclusion criteria but all are non-pure play companies and the index is already at the limit of 15 non-pure play companies.
- There will be a large impact on a lot of stocks but the flows are not very large due to the limited assets tracking the index.
Plus Alpha Consulting (4071 JP) – ¥30bn Offer Leads to ¥5bn TOPIX Inclusion
- Plus Alpha Consulting (4071 JP) listed on TSE Growth at end-June 2021 at ¥2300/share, which was 90x the trailing fiscal year’s earnings. but only about 65x then-current year earnings.
- The stock popped 20+% on Day 1 to close ¥2803. Last Friday, two years and 13% higher at ¥3185/share, the company announced a Secondary Offering and move to TSE Prime.
- It’s a big offering. It’s a smaller TOPIX inclusion event. Next spring we’ll see more upweights.
July TOPIX FFW Rebal – Bigger Than Expected
- Last Friday, the FFW changes for the TOPIX July Free Float Weight Review were announced. There have also been other recent announcements creating flows on 30 July.
- Some of these other recent announcements represent a possible change in ad hoc methodology.
- Total Flow for 30 July is ~$3.3bn a side driven by selling flows (3/4 of the buy flows are reverse funding). $2.1bn of selling is > 3 days ADV.
Shougang Fushan Resources (639 HK): Partial Offer at HK$2.40
- Shougang Fushan Resources (639 HK) has launched a partial offer to acquire a maximum of 125.0m shares (2.47% of outstanding) at HK$2.40 per share, a 17.6% premium to the undisturbed price.
- The partial offer is conditional on approval by more than 50% of disinterested shares and the shareholder approval of the whitewash waiver. There is no minimum acceptance condition.
- The 2020 partial offer, which was at a 9.3% premium to the undisturbed price and -17% below the current offer, was overwhelmingly approved. Therefore, the current offer should be approved.
Genda IPO – Dreams of Reviving the Domestic Arcade Industry with a Roadmap of Doing so as Well
- Genda Inc (9166 JP) is looking to raise around US$100m in its Japan IPO.
- Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.
- As of Apr 23, the firm operated 250 amusement facilities domestically and four facilities in Taiwan.
Korea – A Look at Ecopro, Kumyang & JYP Entertainment
- We take a look at Ecopro Co Ltd (086520 KS), Kum Yang (001570 KS) and Jyp Entertainment (035900 KS) since they appear to be on investor radars.
- Foreign investors have been buyers while retail have been sellers in Ecopro Co and Kum Yang over the last month, while foreign investors have continued to buy Jyp Entertainment.
- Short interest on all stocks has dropped over the last month, though there has been a recent tick up in shorts on Jyp Entertainment (035900 KS).
Ohayo Japan| Fed Job Done-Inflation Over, Stocks Rally; NUGGET: BayCurrent – To Leap from DX to AI ?
- OVERSEAS. Fed job done; Inflation over- Stocks, Bonds Rally, USD falls; China new June new Credit growth accelerates- spurs Resources; Musk launches xAI ; Big Broker Upgrade to Euro Semi
- JAPAN. NKY Futures +0.3% vs Cash; USDJPY 138.5; US CPI print drives yen strength – headwind to stocks; PayPay to list in US ? GS Ups Sony to Conviction BUY
- NUGGET. DX Consultant BayCurrent to report on Friday – Generative AI boom the next driver ?
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