In today’s briefing:
- MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible
- The March BOJ Meeting, April Handover, the Japan Post Bank (7182) Offering, and Follow-On
- Dai Nippon Printing (7912) – Whoop There It Is! ¥100bn Buyback in a Year, ¥300bn in 3yrs
- HSCEI Dividend Futures: Fair Value Estimates as Result Season Looms
- Melco (200 HK) Takes More Money Off The Table
- US Banks – Not Just Silicon Risk
- Dai Nippon Printing – Gauging The Upside
- Nippon Yusen – New MidTermPlan = New Shareholder Return Policy
- Nippon Steel/Mitsui TOB for Nippon Steel Trading (9810) Starts
- Long Short Setup on KOSDAQ 150 Ad Hoc Change with SK Oceanplant’s KOSPI Transfer Listing
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible
- The review period for the March rebalance ended yesterday. Announcement of the changes will be made on 10 March and will be implemented at the close on 17 March.
- Mineral Resources (MIN AU) is a potential index inclusion if it is added to the index universe with lithium revenues nearing the 50% threshold.
- ioneer Ltd (INR AU) is very close to the 98% deletion threshold and could be removed from the index at the March rebalance.
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.
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.
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.
Melco (200 HK) Takes More Money Off The Table
- Melco Resorts & Entertainment (MLCO US) has entered into a share repurchase agreement with a wholly-owned entity of Melco International Development (200 HK) to repurchase (and cancel) 40.37mn shares for US$169.8mn.
- Melco’s effective holding will decline to 51.7% from 53.1% currently. This is the second parent/sub repurchase agreement in the last 7 months.
- MLCO’s previously announced US$500mn share repurchase program remains unaffected by this privately negotiated transaction, with US$412mn still available for future repurchases under the program.
US Banks – Not Just Silicon Risk
- US banks face more than just Silicon Valley risk, namely with net interest income
- Credit costs are also running substantially higher in January monthly data
- Bank loan data suggests a strong economy, not overly positive for rates
Dai Nippon Printing – Gauging The Upside
- Despite the strong performance from Dai Nippon Printing following the announcement of Elliott’s stake we feel upside remains.
- Operating results should benefit from normalisation of the economy and light restructuring potential.
- In addition, we do not see much evidence to suggest that valuations are particularly stretched.
Nippon Yusen – New MidTermPlan = New Shareholder Return Policy
- Today at lunch, Nippon Yusen Kk (9101 JP) released a New Medium-Term Management Plan Presentation (FY2023 to 2026). “Sail Green, Drive Transformations 2026 – A Passion for Planetary Wellbeing.”
- It has basic investment plans, including growing scale of ONE container shipping alliance, growing auto logistics, spending on fuel conversions, offshore wind, hydrogen/ammonia, and doing some logistics M&A
- They also plan a new Shareholder Return Policy. That raises minimum dividend, expected payout ratio, and involves ¥200bn of buybacks the next two fiscal years. Read on.
Nippon Steel/Mitsui TOB for Nippon Steel Trading (9810) Starts
- Today, Nippon Steel Corporation (5401 JP) and Mitsui & Co Ltd (8031 JP) announced they would launch the TOB to take over Nippon Steel Trading Corporation (9810 JP) starting Monday.
- I wrote about the deal and its parameters in December 2022 in Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium.
- This gets done easily I expect. Boring, but decent very short-term carry on the bid side.
Long Short Setup on KOSDAQ 150 Ad Hoc Change with SK Oceanplant’s KOSPI Transfer Listing
- SK Oceanplant will likely be listed on KOSPI in late May or early June. There are no clear reasons for KRX to oppose SK Ocean Plant’s move to KOSPI.
- The top reserved issue in INDUSTRIALS, Sun Kwang (003100 KS), will replace it in KOSDAQ 150. The effective date is the delisting day.
- The impact size on the delisting day alone may be well above 1x ADTV for both companies, so we will likely see a significant price movement.
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