In today’s briefing:
- Allkem+Livent=Arcadium : Expected Index Flows
- KOSDAQ150 Index Rebalance Preview: Posco DX Listing Transfer
- Arb Trading with Stock Rights in Korea: A Basic Guide Featuring LG Display Offering
- Kurabo (3106) – Bigly Buyback And Share Cancellation for A Valueful Value Trap With Hidden Value
- Dai-Ichi Life “Decides” Tender Offer Price and Buyback Price at ¥2,123 and ¥1,491/Share
- Japan Bumpitrage Potential: T&K Toka, IJTT, Taisho, Shidax, Benesse, Tokyo Rakutenchi
- Benefit One (2412 JP): Dai-Ichi Life’s Tender Offer at JPY2,123
- STAR50 Index Rebalance Preview: Four High Impact Changes in March
- 2024 IPOs Pipeline Worldwide (Top 100 Companies)
- StubWorld: Hanwha Corp Is “Cheap”
Allkem+Livent=Arcadium : Expected Index Flows
- Yesterday during the day, Allkem Ltd (AKE AU) shareholders approved the Scheme and Livent (LTHM US) shareholders approved the merger. The deal is done. Allkem last trades 21 Dec.
- NEWCO starts trading 4 January in the US but the Arcadium Lithium CDIs start trading 22 Dec in Australia. S&P/ASX announced they will replace Allkem in the ASX200.
- But I have been asked for a breakdown of flows and timing again, so I have put it into a handy table which I hope makes it less confusing.
KOSDAQ150 Index Rebalance Preview: Posco DX Listing Transfer
- The KRX has preliminarily approved Posco DX (022100 KS)‘s listing transfer from the KOSDAQ Market to the KOSPI Market.
- Posco DX (022100 KS) has announced that its stock will start trading on the KOSPI Market from the open on 2 January.
- We expect Temc (425040 KS) to replace Posco DX (022100 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX) at the close on 28 December.
Arb Trading with Stock Rights in Korea: A Basic Guide Featuring LG Display Offering
- Unlike typical Korean stock rights arbitrage, LG Display’s significant equity offering and active stock futures trading anticipate a spread opening, akin to the recent Hanwha Ocean scenario.
- In contrast to Hanwha Ocean, the absence of major sellers, like KDB, sets this event apart. LG Electronics, the major shareholder with a 37.9% stake, intends to participate.
- Despite differences from Hanwha Ocean, LG Display’s high retail shareholder presence implies a substantial likelihood of stock rights overhang, even without players like KDB.
Kurabo (3106) – Bigly Buyback And Share Cancellation for A Valueful Value Trap With Hidden Value
- Kurabo announced a bigly buyback on Tuesday. At last price it is equivalent to 8+% of shares out. Most likely to target buybacks from cross-holders.
- The company is not cash-rich, but it is financial asset and real estate-rich. And it trades at cheap multiples without even thinking about those assets (themselves worth the market cap).
- The TSE’s “PBR1 OR BUST” movement combined with starting low valuation, high payout, excess assets, mean this value trap has room to move.
Dai-Ichi Life “Decides” Tender Offer Price and Buyback Price at ¥2,123 and ¥1,491/Share
- Today, Dai Ichi Life Insurance (8750 JP) came out with a cover letter and an amended Announcement of Intention to Commence a Tender Offer on Benefit One Inc (2412 JP).
- The cover letter says they have obtained information from Pasona Group (2168 JP) and Benefit One allowing them to calculate a Tender Offer of ¥2,123/share for minorities, and buyback at ¥1,491/share.
- Now we wait. Again. Dai-Ichi Life “intends” to start a tender in mid-Jan 2024 (19 Jan likely earliest start possible) but it is not clear timing will come that early.
Japan Bumpitrage Potential: T&K Toka, IJTT, Taisho, Shidax, Benesse, Tokyo Rakutenchi
- Japan’s merger arb is facing an unusual situation: six merger arb situations (>US$100 million market cap) where the shares have consistently traded through terms.
- We evaluate the bumpitrage potential of these six Japanese merger arb situations on qualitative and quantitative metrics.
- Based on our analysis, the ranking as measured by the highest bumpitrage potential in descending order are T&K Toka, IJTT, Taisho, Shidax, Benesse and Tokyo Rakutenchi.
Benefit One (2412 JP): Dai-Ichi Life’s Tender Offer at JPY2,123
- Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) is JPY2,123 per share, a 32.7% premium to M3 Inc (2413 JP)’s offer.
- The other terms are unchanged. The pre-conditions relate to board recommendation, Pasona Group (2168 JP) support, and the M3 offer not being completed. The tender offer starts in mid-January 2024.
- While M3 has extended its offer period to 17 January 2024, it will unlikely engage in a bidding war. Expect the Board and Pasona to support the Dai-ichi Life proposal.
STAR50 Index Rebalance Preview: Four High Impact Changes in March
- The review period for the March rebalance ends 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
- We expect the index committee to continue using a 6-month minimum listing history resulting in four changes to the index.
- One way turnover is estimated at 3.3% resulting in a one-way trade of CNY 4,717m. The impact on the deletions will be much larger than that on the inclusions.
2024 IPOs Pipeline Worldwide (Top 100 Companies)
- This is our 5th annual edition of the IPOs Pipeline Worldwide (Top 100 Companies) report.
- After weak global IPO markets in 2022 and 2023, the near term trend for global IPOs continues to remain lackluster.
- For those investors that closely monitor the global IPO opportunities, this is a good reference insight to check out the largest potential IPOs that could get completed next year.
StubWorld: Hanwha Corp Is “Cheap”
- A double dose of StubWorld this week as Hanwha Corporation (000880 KS) comes up “cheap” on my monitor.
- Preceding my comments on Hanwha 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%.
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