In today’s briefing:
- MSCI Japan Index Rebalance: Covering to Come After Large Short Buildup
- Kito (6409) Goes Private. Again. This Time With KKR, But Watch the Register
- Tabcorp & The Lottery Co Spin-Off – Valuation Grids and Index Treatment
- Ya Gotta Have Faith (4295). Or Not. Chance for Someone To Get A Big Position in a Net Cash Co
- Woori Financials Placement – Almost a Clean-Up Although past Deals Haven’t Done Much
MSCI Japan Index Rebalance: Covering to Come After Large Short Buildup
- There are 22 deletions for the MSCI Japan Index at the May SAIR. The changes were expected and there is large short buildup on quite a few of the stocks.
- Over the last month, the largest increase in shorts as a percentage of passive selling was on Mercari Inc, Ryohin Keikaku, Tokyo Century Corp, Sohgo Security Services, Pola Orbis Holdings.
- The deletions have underperformed the TOPIX by 22% over the last 6 months and by 10% over the last two months. Position for a bounce post implementation.
Kito (6409) Goes Private. Again. This Time With KKR, But Watch the Register
- Kito Corporation (6409 JP) was taken private in 2003. It was re-IPOed by Carlyle in 2007 but Konecranes stayed an investor until 2016. Then it unwound.
- Today, Kito announced the best results since pre-covid and forecasts for growth. They also announced KKR unit Crosby would launch a Tender to buy them out at a 62% premium.
- Shareholder structure is highly unusual, and interesting to boot, especially looking at the most recent arrival in the top two. The fact there is a break fee is… telling.
Tabcorp & The Lottery Co Spin-Off – Valuation Grids and Index Treatment
- Tabcorp Ltd (TAH AU) will soon spin out its Lottery and Keno business, to be called The Lottery Corp (TLC AU). TAH shares go ex-TLC on 24 May.
- The question is where do they trade. What is in the price? What is not? What are the potential index implications?
- This insight provides a grid of index implications and pro-forma valuations (EV/EBITDA, PER, Dividend Yield) for each and both and the combined entity.
Ya Gotta Have Faith (4295). Or Not. Chance for Someone To Get A Big Position in a Net Cash Co
- Faith Inc (4295 JP) is a very smallcap contents management and platform business. As a business, one could give it a miss forever, but it is cash-rich.
- The company is doing a very large buyback, and for someone who decided they’d be interested, there is a large block for sale.
- The thing is… one would have to act quickly and aggressively.
Woori Financials Placement – Almost a Clean-Up Although past Deals Haven’t Done Much
- KDIC is looking to sell around half of its remaining stake in Woori Financial Group (WFG).
- This is almost a clean-up trade considering that KDIC had a stake of nearly 18% at the start of 2021 and will now be reduced to a less than 2%.
- In this note, we will run the deal through our ECM framework.
Before it’s here, it’s on Smartkarma
