In today’s briefing:
- Sep24 Nikkei 225 Rebal Final Predictions – Fastie Capped, Still 1 ADD, 1 DELETE, 1 Dark Horse and ?s
- [JAPAN ACTIVISM] – Murakami Group Bigger and Bolder on Exedy – STILL Room to Run
- Japan – Passive Selling in a Few Weeks & Shorts Build Up
- Sun Corporation (6736 JP): Third’s Time a Charm for True Wind’s Final Offer
- StubWorld: PCCW’s Premium To NAV Is Unsustainable
- WeRide Pre-IPO – The Negatives – Losses Have Widened, Still in the Early Stages of Commercialization
- Nintendo (7974) | Game Over for Switch
- Absolute Principles of Stock Investment (주식투자절대원칙) – A Book Review
- Alpha Generating Opportunities from the Corporate Value Up Disclosures on the KIND System
- Hong Kong Buybacks Weekly (Aug 2nd): Aia, Meituan, Hsbc
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.
[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.
Japan – Passive Selling in a Few Weeks & Shorts Build Up
- Up to 12 stocks could be deleted from global passive portfolios in August. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
- There has been a buildup of shorts on nearly all these stocks though the extent of the pre-positioning varies.
- The increase in shorts is smaller than the estimated passive selling, though there is a fair amount of variability across the names.
Sun Corporation (6736 JP): Third’s Time a Charm for True Wind’s Final Offer
- True Wind has increased its partial offer for Sun Corp (6736 JP) to JPY5,500 and materially lowered the minimum number of shares to be purchased from 3.3m to 1.1m.
- True Wind’s previous two offers were a non-starter due to an unattractive price and an onerous minimum acceptance threshold. The final offer addresses both these issues.
- The offer will succeed due to the low minimum acceptance threshold and the 25% price uplift vs. the 19% value increase in the Cellebrite stake (since the offer announcement).
StubWorld: PCCW’s Premium To NAV Is Unsustainable
- Continued stub losses are one thing. Ballooning PCCW Ltd (8 HK) parent debt is another.
- Preceding my comments on PCCW and HKT Ltd (6823 HK) 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%.
WeRide Pre-IPO – The Negatives – Losses Have Widened, Still in the Early Stages of Commercialization
- 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 not so positive aspects of the deal.
Nintendo (7974) | Game Over for Switch
- Nintendo missed Q1 with Operating income coming in at Y54.5b (-71% YoY) vs our estimate Y116b and the street at Y94b
- Switch 2 hardware and software units sold are now suffering from buyer fatigue as consumers await the next-gen console
- The stock will likely fall quite sharply over the next week. Looking for good buying opportunity in anticipation of the next console cycle
Absolute Principles of Stock Investment (주식투자절대원칙) – A Book Review
- This insight is a book review of 주식투자절대원칙 (Absolute Principles of Stock Investment), which was written by a famous Korean retail investor called Park Young-Ok.
- Park tries to capture his 30+ years of investing wisdom. I thought this book was excellent, especially because Park included a lot of local flavor of his mindset in investing.
- This insight provides 11 major highlights of the book ‘Absolute Principles of Stock Investment.’
Alpha Generating Opportunities from the Corporate Value Up Disclosures on the KIND System
- One of the key takeaways of the Corporate Value Up disclosures on the KIND system is that it could potentially lead to alpha generating investing opportunities.
- Since the last week of May, there have been 7 companies that provided specific Corporate Value up programs; (4 major financials) have outperformed KOSPI.
- Companies such as KB Financial and Shinhan Financial that provide more meaningful Corporate Value Up action plans are likely to have greater impact on their share prices.
Hong Kong Buybacks Weekly (Aug 2nd): Aia, Meituan, Hsbc
- We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Aug 2nd based on HKEx daily reports.
- In the past 7 days, the top 3 companies that repurchased the most shares from the market were AIA (1299 HK), Meituan (3690 HK), HSBC (5 HK).
- In the past 30 days, the top 3 companies that repurchased the most shares from the market were Meituan (3690 HK), Tencent (700 HK), AIA (1299 HK).
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