In today’s briefing:
- MBK Partners and Jang Family Partner to Control Korea Zinc + Tender Offer of 14.6% of Korea Zinc
- MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn
- MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2bn
- The New FEFTA List (With 7&I (3382) As “Core”) Is Not a Big Hurdle for Couche-Tard
- Midea Group: Offer Upsized at Top Tier. Updated Valuation Analysis
- K Bank IPO Preview
- Quiddity Leaderboard HSTECH Dec 24: One Change Possible; US$538 Capping Flows One-Way
- MV Australia A-REITs Index Rebalance: Ingenia Communities Deleted
- Global Index Korea: Hyundai Rotem Is the Only One Screened. Watch for a Possible LS Electric Repeat
- Merger Arb Mondays (16 Sep) – China TCM, Canvest, GA Pack, Raysum, Seven & I, Fuji Soft, Dyna-Mac
MBK Partners and Jang Family Partner to Control Korea Zinc + Tender Offer of 14.6% of Korea Zinc
- After the market close on 12 September, Maekyung Business Daily reported that MBK Partners will become the largest shareholder of Korea Zinc (010130 KS) along with Young Poong (000670 KS).
- MBK Partners, along with Youngpoong and advisor Jang Hyung-jin, also plans to conduct a tender offer of 14.6% stake in Korea Zinc.
- The tender offer price for Korea Zinc is 660,000 won per share, which is 18.7% higher than the closing price on 12 September.
MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn
- There are 2 adds and 3 deletes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in September. Plus there are capping and float changes.
- Estimated one-way turnover is 11.4% resulting in a round-trip trade of US$1.14bn. There are 16 stocks with over 1x ADV to trade from passive trackers.
- The largest inflows are expected in B2Gold Corp, Evolution Mining and Pan American Silver while the largest outflows are from Kinross Gold and Cia de Minas Buenaventura SAA.
MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2bn
- There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in September but there are a lot of float and capping changes.
- TSMC – ADR and NVIDIA are the largest sells with buying spread across ASML Holding NV, Qualcomm Inc, Applied Materials and Micron Technology.
- The selling in NVIDIA Corp (NVDA US) will add to the selling from the Technology Select Sector SPDR (XLK US) due to the market consultation.
The New FEFTA List (With 7&I (3382) As “Core”) Is Not a Big Hurdle for Couche-Tard
- On Friday 13 September, the Ministry of Finance of Japan released revisions to the list (Japanese, English) of company classifications under the Foreign Exchange and Foreign Trade Act (FEFTA)
- It appears 72 names were newly upgraded to “Core” (“3”), 21 newly listed companies (since the last list in Nov 2021) were labeled “3”, and six lost their Type3 designation.
- Seven & I Holdings (3382 JP) saw breathless news articles Friday suggesting a foreign takeover became more difficult. Not really.
Midea Group: Offer Upsized at Top Tier. Updated Valuation Analysis
- Midea Group(000333 CH) has increased the shares on offer in Hong Kong by 15% to 565.9 million shares, priced at the top end of the range at HKD54.8 per share.
- With strong investor interest, the company may exercise an over allotment option that could take the deal size to USD 4.6 billion.
- Midea’s Hong Kong pricing reflects a nearly 21% discount to its A-share closing price, compared to the average 33% discount for dual-listed companies between Hong Kong and Shanghai or Shenzhen.
K Bank IPO Preview
- K Bank finally provided its IPO prospectus which includes more details of the IPO than what the company already announced about the IPO several days ago.
- Bankers used KakaoBank, SBI Sumishin Net Bank, and Bancorp Inc as comps. Average PBR of 2.56x was used to value K Bank.
- Some investors will question the inclusion of overseas comps including SBI Sumishin Net Bank and Bancorp in the valuation of K Bank.
Quiddity Leaderboard HSTECH Dec 24: One Change Possible; US$538 Capping Flows One-Way
- The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
- In this insight, we take a look at the rankings of potential ADDs and potential DELs for the December 2024 index rebal event.
- At present, we see one ADD and one DEL. If this index change takes place, there could be US$538mn capping flows one-way.
MV Australia A-REITs Index Rebalance: Ingenia Communities Deleted
- Ingenia Communities (INA AU) will be deleted from the Vaneck Vectors Australian Property ETF (MVA AU) in September. There are float changes and capping changes too.
- Estimated one-way turnover is 2.9% and will result in a one-way trade of A$19m.
- After declining over the last year, shorts have started to tick higher in Ingenia Communities (INA AU).
Global Index Korea: Hyundai Rotem Is the Only One Screened. Watch for a Possible LS Electric Repeat
- The cutoff market cap is around ₩3.6T, and Hyundai Rotem is the only stock that screens into the inclusion zone.
- Hyundai Rotem might see a repeat of LS Electric’s pattern: heavy chasing towards screening and a big dive at the decision. Watch for aggressive momentum trades starting late September.
- The stock with the lowest full market cap, Kum Yang, is at risk, but Celltrion Pharm is close behind. KT Corp’s exclusion might save Kum Yang or Celltrion Pharm.
Merger Arb Mondays (16 Sep) – China TCM, Canvest, GA Pack, Raysum, Seven & I, Fuji Soft, Dyna-Mac
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Raysum Co Ltd (8890 JP), Canvest Environmental Protection Group (1381 HK), Greatview Aseptic Packaging (468 HK), China Traditional Chinese Medicine (570 HK).
- Lowest spreads: Fuji Soft Inc (9749 JP), Dyna Mac Holdings (DMHL SP), Seven & I Holdings (3382 JP), Tohokushinsha Film (2329 JP), Alps Logistics (9055 JP).
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