In today’s briefing:
- JSR (4185 JP) Takeover – Why So Wide? FUD and Flows
- STAR50 Index Rebalance Preview: Potential Changes Playing Catchup
- Sime Darby/UMW: It’s All About Scale
- Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea
- Is Samsung M&A About to Happen?
- Nvidia: Better than Dreamed
- Hanwha Ocean: Big Shares Dilution from Rights Offering of 2 Trillion Won
- China Property Developers In Distress – Weekly News & Announcements Tracker | 18-24 August 2023
- Boustead Plantations’ Lifetime High Offer Price
- China Property: Policy Announcement Alert
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.
STAR50 Index Rebalance Preview: Potential Changes Playing Catchup
- The review period for the September rebalance ends today. The changes could be announced on 25 August with the implementation taking place after the close on 8 September.
- The upcoming launch of the STAR100 Index could result in the index committee continuing to use a 6-month minimum listing history resulting in two changes to the index.
- One way turnover is estimated at 2.3% resulting in a one-way trade of CNY 2,658m. The impact on the deletions will be much larger than that on the inclusions.
Sime Darby/UMW: It’s All About Scale
- In one of the largest M&A transactions in Malaysia, Sime Darby (SIME MK) intends to acquire a 61.2% stake in UMW Holdings (UMWH MK) from Permodalan Nasional Bhd for RM3.57bn.
- Sime Darby is paying RM5/share, a token 9.9% premium to last close, but more like 25% when factoring in apparent news leakage.
- Once the stake sale is completed, Sime Darby will launch an unconditional MGO for all remaining shares not held. This transaction is expected to be wrapped up in early 2024.
Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea
- In the inaugural constituent selection, FnGuide revealed a noteworthy pattern. Given the smaller market capitalization of the electrolyte suppliers, FnGuide has included only the largest among them in this ETF.
- SoulBrain, categorized by FnGuide as an electrolyte supplier like Chunbo, has significantly outperformed Chunbo. As a result, there is a considerable likelihood that SoulBrain will replace Chunbo in December.
- The price impact from ETF rebalancing trading has disappeared substantially in Korea. We should focus on the first rebalancing of newly listed ETFs that haven’t yet established a learning effect.
Is Samsung M&A About to Happen?
- Local press states that Samsung Electronics Pref Shares (005935 KS)sold shares as they look to invest in their future capex
- The capex amount for 2023 will be around 40-50 trillion KRW and it doesn’t seem like W3 trillion is a needle mover
- With a new 3 year shareholder return plan, I would think maybe cash is needed to secure ammunition for M&A
Nvidia: Better than Dreamed
- Nvidia, in characteristic fashion, murdered EPS estimates.
- Revenue was $2 billion ahead of the guide, and the guide was another $4 billion ahead of consensus for the next quarter.
- Going into the print, many people were concerned that positioning was bad, i.e., everyone was bullish and expectations were too high. Well, they did not disappoint.
Hanwha Ocean: Big Shares Dilution from Rights Offering of 2 Trillion Won
- After the market close on 23 August, Hanwha Ocean (042660 KS) confirmed that it will conduct a massive rights offering of 2 trillion won.
- The expected rights offering price is 22,350 won, which is 36% discount to current price.
- We believe this rights offering is likely to dilute the existing shareholders and negatively impact Hanwha Ocean’s share price.
China Property Developers In Distress – Weekly News & Announcements Tracker | 18-24 August 2023
- A weekly curated selection of Chinese news articles and company announcements focused on developers in distress
- We look for their deals, updates, specific project progress news (‘local signals’), as well as relevant local research commentaries about the market
- We do not verify the underlying data or provide any opinion, we only select and summarize the information; see direct links to sources
Boustead Plantations’ Lifetime High Offer Price
- Palm oil play Kuala Lumpur Kepong (KLK MK) has entered an agreement with Boustead Holdings, Boustead Plantations (BPLANT MK)‘s largest shareholder, to acquire a 33% plus 1 share stake.
- Upon the completion of the agreement, KLK will make a Mandatory Offer for all shares not owned in BPlant. The Offer Price is RM1.55/share, a lifetime high.
- The agreement conditions are rudimentary. The MGO has no minimum acceptance condition. This is done.
China Property: Policy Announcement Alert
- A new policy easing focused on homebuyers was released, building on July announcements, and now an option for all cities
- More homebuyers will be able to get preferential terms for mortgages as first-time buyers
- A joint notice from the Ministry of Housing and Urban-Rural Development, the People’s Bank of China, and the State Administration of Financial Supervision
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