In today’s briefing:
- Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals
- KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!
- Link REIT (823) – Nil Paid Rights Start Trading Tomorrow – The Trades
- Tencent Meituan Dividend – The US$17bn Overhang Is Almost Here – Lesson from JD.com
- Meituan (3690 HK): Tencent’s In-Specie Div Settles in Two Weeks
- Major Hang Seng Indices Capping Flows Decided (HSCEI, HSI, HSTECH)
- Sosei Group (4565 JP) TSE Prime Promotion and TOPIX Inclusion… Finally
- Japan Post Bank (7182 JP): The Current Playbook
- Meritz Merger Approved: Let’s Now Discuss Key Dates & Entry Points For LONG DGB Financial
- HYBE: May Be Seeking to Raise As Much as 1 Trillion Won (Will Investors Support This Plan)?
Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals
- Japan Post Holdings (6178 JP) plans to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
- We have looked at the deal in our past note, Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback.
- In this note, we talk about the updates since our last note and have a look at some of the past deals.
KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!
- Two thirds of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX).
- One-Way turnover is estimated at 3.5%. Impact on the expected deletions is a lot higher than the impact on the expected inclusions and shorts are building up on the deletes.
- Since the start of the review period, the potential inclusions have outperformed the potential deletions by nearly 50% and the KOSDAQ 150 Index (KOSDQ150 INDEX) by over 20%.
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.
Tencent Meituan Dividend – The US$17bn Overhang Is Almost Here – Lesson from JD.com
- On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
- At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares. Its value has since declined to US$17bn.
- In this note, we talk about the implications of the deal and what one can glean from looking at the previous dividend payout for JD.com.
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.
Major Hang Seng Indices Capping Flows Decided (HSCEI, HSI, HSTECH)
- On 24 February 2023, the Hang Seng Indices released their changes for the March rebalance. No changes in HSI, which was unexpected, and small changes elsewhere.
- Capping flows and the rule changes on treatment of Dual Primary Listed stocks are responsible for the interesting flows. Yesterday’s closing prices are used for final capping.
- Li Auto (2015 HK) and XPeng (9868 HK) are the interesting trades. Still.
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.
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.
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.
HYBE: May Be Seeking to Raise As Much as 1 Trillion Won (Will Investors Support This Plan)?
- In the last few days, there have been local media accounts that mentioned that HYBE may be seeking as much as 1 trillion won (US$760 million) from investors.
- The more likely scenario is that HYBE encounters a greater backlash from the global investors in its attempts to raise nearly 1 trillion won.
- We maintain our existing stance of Kakao eventually winning this M&A battle for the controlling stake in SM Entertainment.
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