In today’s briefing:
- Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price
- Details of MBK’s Four Major Concerns on Management of Korea Zinc
- Unique Rebalancing Pattern & Unique Trading Angle of the KODEX Samsung Group ETF
- Will New KOSDAQ 150 Member HLB Therapeutics Show Webzen-Like Price Moves?
- Last Week in Event SPACE: Shin Kong Financial, Swire Pac, Seven & I, Korea Zinc
- KOSDAQ150 Index Adhoc Rebalance: HLB Therapeutics Replaces Jeisys Medical
- Merger Arb Mondays (23 Sep) – Henlius, GA Pack, China TCM, Canvest, Trancom, Fuji Soft, Platinum
- STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?
- TSMC (2330.TT; TSM.US): 4Q24 Outlook Is Around 10% QoQ Upside.
- Kokusai Electric (6525 JP): Sell-Off Presents Buying Opportunity
Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price
- MBK is watching for a 1 million share trading volume, as that may prompt neutral institutional investors to sell rather than participate in the tender, triggering a price hike.
- MBK may raise the tender price to ₩900,000, a 35% jump, with a local pension fund CIO suggesting it’s the sweet spot for participation.
- MBK believes securing the minimum target would give them 44% voting rights, enough to push their proposals, indicating they’ll go all-in for that 7% stake in this first attempt.
Details of MBK’s Four Major Concerns on Management of Korea Zinc
- In this insight, we discuss in detail MBK’s four major concerns on the management of Korea Zinc.
- We believe that MBK has legitimate concerns on especially the three factors including poor investments, deteriorating profitability, and increase in equity capital/disposal of treasury shares.
- If and when the 2 trillion won+ is raised, then it could lead to another tender offer and the four concerns highlighted in this insight become much more important.
Unique Rebalancing Pattern & Unique Trading Angle of the KODEX Samsung Group ETF
- This KODEX Samsung Group ETF sees 30% AUM outflows pre-rebalancing, with the same chunk flowing back in after, especially noticeable during December.
- Over three years, local brokers sold stock baskets before rebalancing, causing notable price impacts. During this time, Samsung affiliates in the ETF delivered 3-4% returns.
- ChatGPT said:ChatGPTThis isn’t typical NAV arbitrage; it’s likely an unhedged play. Nonetheless, given the consistent price impact and accessible stock futures, it’s worth considering.
Will New KOSDAQ 150 Member HLB Therapeutics Show Webzen-Like Price Moves?
- Jeisys Medical’s getting booted from the KOSDAQ 150, and HLB Therapeutics is stepping in as the new addition. This change will officially hit the book on Wednesday, September 25.
- HLB Therapeutics, with a ₩0.70T market cap and 87% float, is set for a 0.51% weight in KOSDAQ 150, triggering over 2 million shares in passive buying: 3.26x 30-day ADTV.
- With today’s after-hours volume spike in HLB Therapeutics, we’re likely to see some price action from early movers spilling into Monday’s open, similar to what we saw with Webzen.
Last Week in Event SPACE: Shin Kong Financial, Swire Pac, Seven & I, Korea Zinc
- Stay long Shin Kong Financial Holding (2888 TT) and buy more, or get long. CTBC Financial Holding (2891 TT) may make a better run at it, and may even bump.
- It’s a hard to be bearish Swire Pacific (A) (19 HK) at 0.34x P/B. Yet the Hong Kong property market remains a challenging space. To put it mildly.
- Seven & I Holdings (3382 JP) saw breathless news articles suggesting a foreign takeover became more difficult. Not really.
KOSDAQ150 Index Adhoc Rebalance: HLB Therapeutics Replaces Jeisys Medical
- HLB Therapeutics (115450 KS) will replace Jeisys Medical (287410 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX) next week.
- Passive trackers will need to buy 1.8 days of ADV in HLB Therapeutics (115450 KS) and sell over 4 days of ADV in Jeisys Medical (287410 KS).
- Recent ad hoc inclusions to the KOSDAQ 150 Index (KOSDQ150 INDEX) have jumped post announcement of index inclusion but have sold off after the inclusion.
Merger Arb Mondays (23 Sep) – Henlius, GA Pack, China TCM, Canvest, Trancom, Fuji Soft, Platinum
- 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: Canvest Environmental Protection Group (1381 HK), Shinko Electric Industries (6967 JP), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK), China Traditional Chinese Medicine (570 HK).
- Lowest spreads: Tohokushinsha Film (2329 JP), Dyna Mac Holdings (DMHL SP), Fuji Soft Inc (9749 JP), Trancom Co Ltd (9058 JP), Seven & I Holdings (3382 JP).
STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?
- 90% of the way through the review period, there could be 1 change for the SSE STAR50 (STAR50 INDEX) and 5 changes for the STAR100 Index.
- We estimate turnover of 1% for the STAR50 INDEX and 5.5% for the STAR100 Index. The net round-trip trade is CNY 3.2bn (US$453m).
- The forecast add to the SSE STAR50 (STAR50 INDEX) has massively outperformed the forecast deletion from the index over the last two months.
TSMC (2330.TT; TSM.US): 4Q24 Outlook Is Around 10% QoQ Upside.
- We anticipate that the upcoming 4Q24 will likely see a ~10% quarter-over-quarter (QoQ) upside.
- Among TSMC’s top clients are companies from the US, Taiwan, and Japan.
- Recently, we have heard that TSMC is reducing wafer quotations by about ~10% for 28nm and below, in order to adapt to the current environment.
Kokusai Electric (6525 JP): Sell-Off Presents Buying Opportunity
- Kokusai has dropped 44% from its July peak, offering a long-term opportunity at reasonably attractive valuations. Management’s guidance looks conservative.
- KKR has reduced its stake from 43.4% to 23.2%, increasing the float while indicating that it still sees a long-term opportunity. Applied Materials has bought 14.7% of the company.
- The completion of a new factory in Japan should double production capacity to meet demand from makers of AI processors, high-bandwidth memory, 3D NAND and power devices.
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