In today’s briefing:
- JAPAN ACTIVISM: Murakami Target Mitsui Matsushima Cleans Up
- Aisin (7259 JP): The Current Playbook
- Fy23 GPIF Results and Portfolio Changes – Outlook for FY24
- Canvest Environmental (1381 HK): Possible Privatisation at HK$4.90
- Last Week in Event SPACE: Barito Renewables, Honda, Raffles Medical, Daidoh, Hanwha Corp
- Merger Arb Mondays (08 Jul) – China TCM, L’Occitane, A8 Media, GA Pack, Asia Cement, Hollysys, MMA
- S&P/ASX 100/200 Index Adhoc Rebalance: Potential Replacements for Altium (ALU AU)
- Timee (215A JP) IPO: Valuation Insights
- Timee Pre-IPO – Thoughts on Valuation – Primed for a Decent Upside at the Current Range
- HK Connect SOUTHBOUND Flows (To 5 Jul 2024); SOE Bank and SOE Petro-Energy Flows Dominate
JAPAN ACTIVISM: Murakami Target Mitsui Matsushima Cleans Up
- On 20 May, I wrote that Japanese activist MURAKAMI Yoshiaki and relations/affiliates had gone from 5% to 20% of Mitsui Matsushima (1518 JP) in 5 trading days.
- I wondered if it was real, or a pump & dump, but they went to near 30% in following days. THEN they drifted off as Murakami-Fille sold while Murakami-Père bought.
- The reasoning was not clear, but the story had real potential. Still does. Today, shareholders got more good news.
Aisin (7259 JP): The Current Playbook
- Since the US$1.1 billion secondary placement announcement, Aisin (7259 JP)’s shares are up 2.5% from the undisturbed price of JPY5,243 per share (27 June).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Aisin’s shares have deviated from the pattern of previous large placements.
- The offering will likely be priced on 8 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.
Fy23 GPIF Results and Portfolio Changes – Outlook for FY24
- Last year, the GPIF as a whole returned 22.67% in yen terms. As a whole, GPIF outperformed its benchmarks by 0.04% after paying 0.02% in fees and costs.
- GPIF traded ¥30trln of assets – relatively high turnover for a fund which espouses very low turnover – but there’s a reason for that. There were also sharp active/passive moves.
- This year is the last year in the “cycle” of the “old” Policy Allocation Framework. A new one is likely to be introduced this year.
Canvest Environmental (1381 HK): Possible Privatisation at HK$4.90
- Grandblue Environment Co A (600323 CH) disclosed a potential pre-conditional privatisation of Canvest Environmental Protection Group (1381 HK) at HK$4.90 per share, a 20.7% premium to the last close price.
- Completing the capital injection from SOE entities into the offeror is a precondition. Grandblue also proposes that the controlling shareholder roll over 7.23% of its effective 44.75% stake.
- While not a knockout bid, the offer is reasonable. Shareholders with blocking stakes should support a binding proposal. Timing is the key risk.
Last Week in Event SPACE: Barito Renewables, Honda, Raffles Medical, Daidoh, Hanwha Corp
- It’s just a question of when, not if, the bubble bursts for Barito Renewables Energy (BREN IJ), which is up 1,200% since it October 2023 IPO.
- A Reuters article suggests a ¥500bn secondary offering for Honda Motor (7267 JP). Honda has since said there is smoke. And we can assume there is fire.
- Loo Choon Yong, Raffles Medical Group (RFMD SP)‘s founder and major shareholder, continues to chip away at minorities, and now holds 54.944%,
Merger Arb Mondays (08 Jul) – China TCM, L’Occitane, A8 Media, GA Pack, Asia Cement, Hollysys, MMA
- 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), China Traditional Chinese Medicine (570 HK), A8 New Media (800 HK), Greatview Aseptic Packaging (468 HK), Asia Cement China (743 HK).
- Lowest spreads: Fancl Corp (4921 JP), Great Eastern Holdings (GE SP), Chilled & Frozen Logistics Holdings (9099 JP), Tatsuta Electric Wire & Cable (5809 JP), Kfc Holdings Japan (9873 JP).
S&P/ASX 100/200 Index Adhoc Rebalance: Potential Replacements for Altium (ALU AU)
- With all regulatory approvals received, the Scheme Meeting for Renesas Electronics (6723 JP)‘ acquisition of Altium Ltd (ALU AU) will take place on 12 July.
- If approved at the Scheme Meeting and at the Second Court Hearing, Altium Ltd (ALU AU) will stop trading from the close on 19 July.
- The replacements for Altium Ltd (ALU AU) in the ASX100/200 indices could be announced late this week with implementation at the close on 19 July.
Timee (215A JP) IPO: Valuation Insights
- Timee Inc (215A JP), a leading part-time job platform in Japan, is seeking to raise up to US$286 million. Book-building runs from 9 to 23 July.
- We previously discussed the IPO in Timee (215A JP) IPO: The Bull Case and Timee (215A JP) IPO: The Bear Case.
- In this note, we discuss valuation. Our analysis suggests that Timee is attractively valued at the IPO price range in the context of the forecasted growth.
Timee Pre-IPO – Thoughts on Valuation – Primed for a Decent Upside at the Current Range
- Timee Inc (215A JP) is looking to raise US$290m in its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
- Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
- In an earlier note, we looked at the firm’s past performance and peer comparison. In this note, we discuss our thoughts on valuation.
HK Connect SOUTHBOUND Flows (To 5 Jul 2024); SOE Bank and SOE Petro-Energy Flows Dominate
- SOUTHBOUND was again a net buyer, for HK$10.9bn this week, on smallish two-way volumes. Banks were a big buy.
- The more I watch, the more I think the last few months have had serious national team buying of banks and energy, perhaps ahead of shareholder return policy changes.
- But valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows – national team and otherwise.
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