In today’s briefing:
- Keisei Electric (9009) Share Buyback – Interesting Dynamics & Opportunity
- Roland DG (6789) – Tender Offer by Taiyo Partners – Nice Premium But Too Cheap
- Block Deal Sale of 1.7% Stake of Woori Financial by IMM Private Equity
- New Information on Korea Value-Up Index Scoring System & Constituent Weighting
- MS&AD Cross-Shareholding – At Least US$20bn of Cross-Shareholding to Sell
- StubWorld: Keisei’s ToSTNeT-3 Buyback. Stay Bearish
- Roland DG (6789 JP): Brother (6448 JP)’s Unexpected Competing Hostile Offer
- Optus Sale Would Be A BIG Payday For SingTel
- Quiddity Leaderboard STAR 50 Jun 24: 3 Changes Likely But Some Question Marks Over Certain Names
- Roland DG (6789) – Brother (6448) Launches Hostile Overbid to Taiyo MBO – You Love To See It
Keisei Electric (9009) Share Buyback – Interesting Dynamics & Opportunity
- In late February, Keisei Electric Railway Co (9009 JP) announced a 5.0mm share (2.96%) ¥33bn buyback, to be executed in the following 3 months. That meant likely ToSTNeT-3.
- I thought that mildly bullish. Shares rose 0.05% the next day. Then we got an OLC offering announcement. I thought that bearish. The stock popped early but fell hard.
- Today the announcement. It IS a ToSTNeT-3. tomorrow. At ¥6,320/share. But it is an Accelerated Share Repurchase. Which changes things. Or it doesn’t. But it bears watching closely, maybe acting.
Roland DG (6789) – Tender Offer by Taiyo Partners – Nice Premium But Too Cheap
- Taiyo Pacific Partners took the original parent company (Roland Corp (7944 JP) of Roland DG Corp (6789 JP) private in 2014. It was re-listed in 2020.
- Roland DG is one of the world’s leading large format digital printer manufacturers. They also make some interesting medical devices and systemic tools, and 3D milling/printing/engraving/photo impact machines.
- This TOB is at a 30.1% premium. Almost a 10yr high. But it is not expensive. And even if TPP has 20%, there is a LOT of float left over.
Block Deal Sale of 1.7% Stake of Woori Financial by IMM Private Equity
- IMM Private Equity announced that it is selling a 1.7% stake in Woori Financial Group (316140 KS) in a block deal sale.
- The number of shares subject to sale is 12.56 million, or 177.7 billion won to 181.5 billion won.
- Block deal sale discount range is reasonable, valuation multiples are low, and we expect continued positive capital inflow into stocks related to Corporate Value Up in the next 12 months.
New Information on Korea Value-Up Index Scoring System & Constituent Weighting
- KRX considers a comprehensive change to the Value-up Index scoring system. Weightings emphasize ROE, PER, and FCF while reducing PBR weight.
- KRX considers adopting scoring-based constituent weighting to prevent JPX Prime 150’s issues, but NPS opposes. Float market cap weighting like JPX Prime 150 is contemplated to address concerns.
- Momentum trading in the Value-up initiative will favor low PER and high ROE stocks over low PBR. The semiconductor sector is anticipated to benefit significantly from float market cap-based weighting.
MS&AD Cross-Shareholding – At Least US$20bn of Cross-Shareholding to Sell
- The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.
- MS&AD Insurance (8725 JP) had a stake over US$100m in at least 29 listed Japanese stocks, amounting to a total of US$17.4bn.
- In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.
StubWorld: Keisei’s ToSTNeT-3 Buyback. Stay Bearish
- Keisei Electric Railway Co (9009 JP)‘s previously announced buyback is now confirmed to be a ToSTNeT-3 buyback. But also an accelerated share repurchase.
- Preceding my comments on Keisei Electric are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Roland DG (6789 JP): Brother (6448 JP)’s Unexpected Competing Hostile Offer
- Brother Industries (6448 JP) has disclosed an unexpected competing hostile offer for Roland DG Corp (6789 JP) at JPY5,200 per share, a marginal 3.3% premium to the Taiyo-sponsored MBO (JPY5,035).
- Unlike the Taiyo offer, the Brother offer is pre-conditioned on regulatory approvals and has a proposed start date of mid-May. The Board is evaluating the Brother offer.
- The Board’s three options with declining probability are to ask Taiyo for a bump, continue to recommend an unchanged Taiyo offer or recommend the Brother offer.
Optus Sale Would Be A BIG Payday For SingTel
- Reportedly (AFR), Singtel (ST SP) is in advanced talks to sell Optus, Australia’s second-largest telco, to Brookfield for A$16bn-A$18bn.
- SingTel quickly countered there is no impending deal; and “Optus remains an integral and strategic part of the Singtel Group and we are committed to Australia for the long term.”
- Optus’ EBITDA in 3Q24 and 9M24 fell 1.8% and 8.3% in S$ terms. Extrapolating out for FY24E suggests pricing under this (very) indicative Offer of around 7.6-8.6 turns of EBITDA.
Quiddity Leaderboard STAR 50 Jun 24: 3 Changes Likely But Some Question Marks Over Certain Names
- STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
- In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the June 2024 index rebal event.
- I currently expect three changes for the STAR 50 index in June 2024 but there are some questions marks over the names leading the race to become ADDs.
Roland DG (6789) – Brother (6448) Launches Hostile Overbid to Taiyo MBO – You Love To See It
- A month ago, Engagement Investor Taiyo Pacific Partners launched an MBO on Roland DG Corp (6789 JP) after having done a takeover of their former sub years ago.
- I said it was too cheap. Machinery company Brother Industries (6448 JP) has decided the same, and has announced a hostile/unsolicited overbid 3.3% higher. Tender to start in May. Fun!!!
- This will almost certainly get bid even higher as people would expect the MBO bidders won’t simply give up. More below.
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