In today’s briefing:
- Overall Assessment of the Value-Up Policy-Related Aspects of the Tax Reform Plan Released Today
- Solactive Global Uranium & Nuclear Components Index Rebalance: Two Adds & US$500m Trade
- Timee IPO Trading – Garnered a Strong Demand, Should Pop
- Clarifications Regarding the FSS’s Unexpected Revision Request for the Doosan Mergers
- IDX30/LQ45/IDX80 Index Rebalance: Constituent, Float & Capping Changes
- StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low
- Zhihu (2390 HK/ZH US)’s Cheeky Buyback
- Tencent/Netease: Zero for Major Names; Industry Revenue Growth Flattish in First Half
- Jeisys Medical (287410 KS): Archimed Reloads Delisting Offer
- Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger
Overall Assessment of the Value-Up Policy-Related Aspects of the Tax Reform Plan Released Today
- The highest dividend tax rate drops from 49.5% to 25%, leading the local capital market to view the reform as more shareholder-focused than company-focused.
- The top inheritance tax rate drops from the 60% range to 40%, a meaningful reduction for conglomerates like Hyundai and Hanwha, though below initial expectations.
- Tax incentives in the reform are less aggressive than expected, with modest corporate and inheritance tax cuts. However, this compromise increases the likelihood of its passage, boosting short-term market expectations.
Solactive Global Uranium & Nuclear Components Index Rebalance: Two Adds & US$500m Trade
- Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index with implementation at the close on 31 July.
- Oklo Inc (OKLO US) and Western Uranium & Vanadium Corp (WUC CN) will be added to the index. Estimated one-way turnover is 7.9% resulting in a round-trip trade of US$486m.
- There are only 4 trading days to implementation of the changes and we’d watch out for big moves on stocks that have more than 2x ADV to trade.
Timee IPO Trading – Garnered a Strong Demand, Should Pop
- Timee Inc (215A JP) raised US$300m in its Japan IPO. The IPO had been a 100% secondary selldown by existing shareholders.
- Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
- We have looked at the company’s past performance in our previous notes. In this note, we talk about the trading dynamics.
Clarifications Regarding the FSS’s Unexpected Revision Request for the Doosan Mergers
- The FSS requested Doosan Robotics to revise the prospectuses for both the Share Swap with Doosan Bobcat and Merger with Doosan Enerbility.
- Although the FSS’s wording seems aggressive, it does not request the cancellation. Authorities are displeased but lack political momentum to derail Doosan’s restructuring.
- The FSS asks Doosan to clarify merger synergies, warn of Robotics’ overvalued stock price and potential decline, and highlight the collaborative robot market’s growth risks.
IDX30/LQ45/IDX80 Index Rebalance: Constituent, Float & Capping Changes
- There is 1 constituent change for the LQ45 Index and 2 constituent changes for the IDX80 Index at the rebalance to be implemented at the close on 31 July.
- The largest passive inflows are expected in Amman Mineral Internasional (AMMN), Bank Rakyat Indonesia (BBRI), Bank Central Asia (BBCA), Bank Mandiri Persero (BMRI) and Jasa Marga (Persero) (JSMR).
- The adds have moved higher over the recent past and are near their highs while the deletes have dropped over the last few years and are trading near their lows.
StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low
- A double dose of StubWorld this week: both the implied stub for Amorepacific Group (002790 KS) and the simple ratio (Group/Amorepacific Corp (090430 KS)) are around lifetime low levels.
- Preceding my comments on Amorepacific 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%.
Zhihu (2390 HK/ZH US)’s Cheeky Buyback
- Back on the 19th July, online Q&A play Zhihu (2390 HK/ZH US) announced the buyback of 46.92mn ordinary A shares (15.9% of shares out) at HK$9.11/share (US$3.50/ADS).
- Assuming the buyback is fully taken up, chairman Yuan Zhou’s stake will increase to 44.4% from 42.9% currently (held via A shares and the weighted-voting B shares).
- The key condition is a simple majority vote from independent shareholders. Zhihu is sitting on net cash of US$764mn. A significantly larger buyback, or higher price, could have been initiated.
Tencent/Netease: Zero for Major Names; Industry Revenue Growth Flattish in First Half
- China announced game approval for the June batch. The number of games approved remained at a higher level than 2023.
- The pace of China game approval appears to have accelerated to the same level as pre-tightening. Of companies that we are monitoring, none got any approval.
- China’s CADPA published a semi-annual report pointing to flattish growth of gaming revenue in the first half.
Jeisys Medical (287410 KS): Archimed Reloads Delisting Offer
- Last month, aesthetic laser maker Jeisys Medical (287410 KS) announced French PE outfit Archimed SAS was seeking to delist the company.
- Via a Tender Offer, Archimed sought to acquire 72% of Jeisys at ₩13,000. Archimed also inked agreements with founders/directors for 26.44%, taking its possible % holding to 98.44%.
- The Tender Offer closed on the 22nd July with Archimed holding 81.39% (including the aforementioned agreements). Archimed has now reloaded, on the same terms. There is no minimum acceptance condition.
Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger
- On 26 July, it was reported in the local media that there has been a major breach of duty by nearly 40 current/former employees at Doosan Bobcat.
- The fact that this material breach of duty was not revealed prior to the merger announcement adds to the argument that this merger/split/delisting should be either cancelled or redone.
- We remain negative on all major companies involved in this deal including Doosan Bobcat and Doosan Robotics. The breach of duty at Doosan Bobcat adds to the fire.
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