In today’s briefing:
- Link REIT (823) – Nil Paid Rights Start Trading Tomorrow – The Trades
- Meituan (3690 HK): Tencent’s In-Specie Div Settles in Two Weeks
- The March BOJ Meeting, April Handover, the Japan Post Bank (7182) Offering, and Follow-On
- Japan Post Bank (7182 JP): The Current Playbook
- Dai Nippon Printing (7912) – Whoop There It Is! ¥100bn Buyback in a Year, ¥300bn in 3yrs
- Meritz Merger Approved: Let’s Now Discuss Key Dates & Entry Points For LONG DGB Financial
- Sosei Group (4565 JP) TSE Prime Promotion and TOPIX Inclusion… Finally
- MSCI Korea May Review: Two New Names Are Emerging for Inclusion
- HSCEI Dividend Futures: Fair Value Estimates as Result Season Looms
- Techtronic’s Rebuttal: Some Clarifications Are Too Good to Be True
Link REIT (823) – Nil Paid Rights Start Trading Tomorrow – The Trades
- In early February, Link REIT (823 HK) announced it would do a 1 for 5 rights offering, with the Exercise Price well below TERP.
- The REIT units dropped in price as the already unlevered REIT was not seen to be needing further deleverage and early debt repayment in a rising rate environment.
- Units went ex-Rights on 24 February. The rights start trading tomorrow. That means flows. Of multiple kinds. Worth thinking about.
Meituan (3690 HK): Tencent’s In-Specie Div Settles in Two Weeks
- From the time of Tencent (700 HK) announcement of the in-specie dividend, Meituan (3690 HK) has underperformed Tencent (700 HK) and Alibaba Group (9988 HK) by around 35%.
- Surprisingly, short interest on Meituan (3690 HK) has dropped in the last few months as the stock has continued to drop.
- As with JD.com Inc. (9618 HK), Prosus (PRX NA) could sell Meituan (3690 HK) in the months following settlement. Or they could remove the overhang by placing a block.
The March BOJ Meeting, April Handover, the Japan Post Bank (7182) Offering, and Follow-On
- Tomorrow is BOJ Governor Kuroda’s last Monetary Policy Meeting, capping a ten year run as one of the most dynamic central bankers in the world.
- Tomorrow is also the day BEFORE the first day on which the Japan Post Bank (7182 JP) mega offering could price and the last day of bookbuild indications.
- I am not saying this is not coincidence, but it is worth thinking about the interplay.
Japan Post Bank (7182 JP): The Current Playbook
- Since the offer announcement, Japan Post Bank (7182 JP)/JPB’s shares have risen by 4.4%. On 1 March, JPB completed the ToSTNeT-3 buyback by acquiring 59.5 million shares for JPY70 billion.
- To understand JPB’s trading pattern, it is instructive to look at Japan Post Insurance (7181 JP)/JPI’s 2019 offering and Japan Post Holdings (6178 JP)/ JPH’s 2021 offering.
- JPB’s shares should follow the trading pattern playbook of JPI’s 2019 and JPH’s 2021 offerings and start trading below the pre-offer last trading price during the subscription period.
Dai Nippon Printing (7912) – Whoop There It Is! ¥100bn Buyback in a Year, ¥300bn in 3yrs
- Elliott Management was noted several weeks ago to have bought near 5% of Dai Nippon Printing (7912 JP). The stock popped when people found out.
- Then the stock popped when the company said they’d announce the outline for their new Mid-Term Management Plan on 9 March, and that would include more capital allocation measures.
- Today we got the Outline. There are more capital allocation measures. The numbers look big. Nuance is required to understand the impacts over time.
Meritz Merger Approved: Let’s Now Discuss Key Dates & Entry Points For LONG DGB Financial
- K200 ad hoc change announcement date should be March 30 as the buyback ends on March 28, and rebalancing trading should occur on March 31.
- From a juice-level perspective, the entry point and timing for JB Financial showed much better performance from EGM approval rather than the announcement.
- We should consider gradually building up positions from this point until March 30 announcement or one day after (T-1 effective) while utilizing Kodex Banks ETF to hedge our long positions.
Sosei Group (4565 JP) TSE Prime Promotion and TOPIX Inclusion… Finally
- Sosei Group (4565 JP) is a Tokyo-based biopharma group which started small, got big and exciting, and hasn’t grown in market cap in years, while it has grown in ambition.
- It has strategic relationships with AbbVie, Biohaven, Genentech, GSK, Takeda, Pfizer, AstraZeneca, and Takeda and a market cap near ¥200bn.
- It has always had impressive shareholder support. Now after nearly 20 years on TSE Mothers/Growth (the limit was supposed to be 10yrs), it moves to TSE Prime and TOPIX.
MSCI Korea May Review: Two New Names Are Emerging for Inclusion
- Two new names have emerged as likely candidates for inclusion in Korea: SM Entertainment and Cosmo Advanced Materials, whose YTD returns are approximately 104% and 83%, respectively.
- For SM Entertainment, the float rate may be adjusted downward depending on the tender offer results. Still, even if modified to 50%, it will surpass the float market cap hurdle.
- Cosmo still has a significant gap in the full market cap. However, we should note that the recent insane rally in Korea’s EV battery sector shows no signs of ending.
HSCEI Dividend Futures: Fair Value Estimates as Result Season Looms
- The HSCEI 2023 dividend futures have moved up over the last few months though there was a sharp move lower in the last couple of weeks.
- With results and dividends scheduled to be announced in the next few weeks, we take a look at the fair value estimate for the 2023 dividend futures.
- We also list out the things to watch for over the next few weeks and months that could impact the 2023 dividend futures and the 2023/24 dividend steepener.
Techtronic’s Rebuttal: Some Clarifications Are Too Good to Be True
- Following Jehoshaphat’s allegations that profits are inflated dramatically over a decade with manipulative accounting, Techtronic Industries (669 HK) has issued a rebuttal clarifying that the accusations are without any merit.
- TTI’s beyond comparison performance is due to world class brands such as Milwaukee, Ryobi and Hoover which have helped top line grow at 13% CAGR over the past 13 years.
- Nevertheless, we have assessed some of the company’s clarifications here which seemed too good to be true.
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