In today’s briefing:
- Rio Tinto (RIO AU/LN): Thinking About The “Unification”
- Sep24 Nikkei 225 Rebal Final Predictions – Fastie Capped, Still 1 ADD, 1 DELETE, 1 Dark Horse and ?s
- Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed
- True Wind Raises Partial Offer for Sun Corp Further, Leaving an Interesting Back End
- ENEOS Bumps Tatsuta Elec (5809) Bid – 8.3% Bump Matches 8.7% Rise in BVPS Since Announcement
- [JAPAN ACTIVISM] – Murakami Group Bigger and Bolder on Exedy – STILL Room to Run
- Legend Biotech (LEGN.US) Offer Update – Some New Information About the Takeover Worth the Attention
- Pacific Metals (5541 JP): Here We Go Again Murakami Becomes a Substantial Shareholder
- WeRide Pre-IPO – The Positives – Large Monetisation Opportunity on the Horizon
- Quiddity Leaderboard KOSPI 200 Dec 24: Up to 5 ADDs & 6 DELs Possible
Rio Tinto (RIO AU/LN): Thinking About The “Unification”
- Just shy of three years ago, BHP (BHP AU) announced the unification of its dual-headed corporate structure to make BHP “simpler and more agile”.
- Collapsing DLCs/share-classes was all the rage back then. The prior year, Unilever (UNA NA) collapsed its DLC; and Royal Dutch Shell unified its A and B lines in 2021.
- Rio (RIO AU/LN) is one of only a handful of remaining DLCs. Renewed investor calls to unwind the DLC and the recent UK’s listing regime reform necessitate a rethink.
Sep24 Nikkei 225 Rebal Final Predictions – Fastie Capped, Still 1 ADD, 1 DELETE, 1 Dark Horse and ?s
- The Sep 2024 Nikkei 225 Review base date is here. As before, I see one ADD, one DELETE, one capping, and one Very Dark Horse.
- The rules are clear, but not. This causes confusion. There may be unwritten rules keeping the Very Dark Horse out til next time.
- The Nikkei Index Team announced Fast Retailing (9983 JP) would be capped. I didn’t expect that now. That means $2.2bn+ of selling 30Sep and a reverse funding trade.
Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed
- The review period for the Nikkei 225 (NKY INDEX) September rebalance ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.
- Fast Retailing (9983 JP)‘s capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September.
- Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.
True Wind Raises Partial Offer for Sun Corp Further, Leaving an Interesting Back End
- On 10 June, Sun Corp subsidiary Cellebrite DI (CLBT US)‘s SPAC sponsor True Wind Capital launched a Tender Offer for 19% of SunCorp at a premium but discount to NAV.
- The price was too low. CLBT shares rose. They lifted the TOB price by 8% to ¥4750. Still too low. It was trading there. Now they have lifted to ¥5500.
- Now a 49% premium to undisturbed, 29.4% premium to all-time high prior to the first tender. Changes in terms means this could get done. More bullish than it looks.
ENEOS Bumps Tatsuta Elec (5809) Bid – 8.3% Bump Matches 8.7% Rise in BVPS Since Announcement
- Several weeks ago, ENEOS Holdings (5020 JP) launched its long-delayed Tender Offer for Tatsuta Electric Wire & Cable (5809 JP) with no bump despite the time value of money.
- It said the price reflected Tatsuta’s value sufficiently. A week ago on the 19th, ENEOS extended the Tender Offer, likely because they didn’t have the shares. Price was still “sufficient.”
- I suggested it might not be; I didn’t expect a big bump, but caveated earnings. Friday produced great Q1 earnings, and a bump from ¥720/share to ¥780/share.
[JAPAN ACTIVISM] – Murakami Group Bigger and Bolder on Exedy – STILL Room to Run
- In late May, Toyota Group member Aisin (7259 JP) announced it would sell its 37% stake in Exedy Corp (7278 JP). The market dropped. But that was an opportunity.
- There was an announcement, a ToSTNeT-3 buyback, the offering, and more buyback to come. On 30 May, I said “Buy the deal, buy in the market. It’s cheap and vulnerable.”
- Exedy is up 21% since. On 17 June, activist Murakami-san’s group went over 5%. Then they bought more. Now they have 15%. Or more. Still cheap. Still vulnerable.
Legend Biotech (LEGN.US) Offer Update – Some New Information About the Takeover Worth the Attention
- This takeover could be at negotiation stage and different parties haven’t reached an agreement.When Legend Bio releases official announcement, it means main issues of the deal have been agreed upon.
- Genscript will be a big winner if Legend Bio is acquired. Major shareholders would take measures to maximize personal interests.The concern is whether Genscript will offer dividends to small/medium shareholders/investors.
- Whether the takeover is successful or not, reasonable valuation of Legend Bio is between US$12.5- US$15 billion. Due to uncertainties, we recommend investors buy Legend Bio directly rather than Genscript.
Pacific Metals (5541 JP): Here We Go Again Murakami Becomes a Substantial Shareholder
- Murakami’s entity, City Index Eleventh, and daughter reported a 5.40% stake in Pacific Metals (5541 JP). The shares were purchased from 27 May to 25 July.
- Murakami’s average buy-in price is JPY1,259 per share, an 11.1% discount to the last close price. Murakami has been a substantial shareholder twice before.
- Murakami’s previous dealings in Pacific Metals were a pump-and-dump where he built up around 8% stake, only to sell into the share price pop subsequently. Expect more of the same.
WeRide Pre-IPO – The Positives – Large Monetisation Opportunity on the Horizon
- WeRide Corp (WER CH) is looking to raise around US$300m in its upcoming US IPO.
- WeRide provides autonomous driving products and services from L2 to L4 of driving automation.
- In this note, we will talk about the positive aspects of the deal.
Quiddity Leaderboard KOSPI 200 Dec 24: Up to 5 ADDs & 6 DELs Possible
- KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
- In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in December 2024.
- We expect up to five ADDs and six DELs in the KOSPI 200 index during the December 2024 index rebal event based on the latest available data.
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