In today’s briefing:
- KRX Value-Up Index Will Have Two Separate Indices, Excellent & Promising, With 150 Constituents
- CSI300 Index Rebalance Preview: Round-Trip Trade Tops US$6bn as ETF Creations Soar
- MBK’s Dual Tenders for Korea Zinc and Youngpoong Precision: The Largest Deal Ever in Korea
- Shinko Electric (6967 JP) Takeover – Time To Buy Dips, and Ibiden (4062 JP)
- MBK Partners and Jang Family Partner to Control Korea Zinc + Tender Offer of 14.6% of Korea Zinc
- Tender Offer of 43.4% Stake in Young Poong Precision by MBK
- Raymond Lifestyle: A Value Play in Ethnic Wear with Special Situation Potential
- When Dissenting REALLY Pays Off
- Trial Holdings IPO Lockup – Large Number of Small Holders Hold Around US$400m of Stock
- CR Beverage IPO: The Bear Case
KRX Value-Up Index Will Have Two Separate Indices, Excellent & Promising, With 150 Constituents
- KRX plans to launch the Value-Up Index as two separate indices: the “Excellent Value-Up Index” and the “Promising Value-Up Index.”
- The universe will include 150 constituents from KOSPI 200 and KOSDAQ 150. Allocation between indices is undecided, with sector limits on number and weight confirmed.
- The key indicators (ROE, PBR, shareholder return rate) remain unchanged. The Promising Index’s weights are undisclosed, but the Excellent Index favors financial and automotive stocks.
CSI300 Index Rebalance Preview: Round-Trip Trade Tops US$6bn as ETF Creations Soar
- There could be 17 changes at the December rebalance with the Industrials sector gaining 3 index spots and the Information Technology sector losing 3 spots.
- We estimate one-way turnover of 2.9% at the rebalance leading to a one-way trade of CNY 21.96bn (US$3.1bn). There are 22 stocks with over 3x ADV to trade.
- Impact on the stocks has increased as creations in ETFs linked to the CSI 300 Index continue. That flow will reverse from the deletions in the next few months.
MBK’s Dual Tenders for Korea Zinc and Youngpoong Precision: The Largest Deal Ever in Korea
- MBK launches a tender offer to acquire 14.6% of Korea Zinc at ₩660,000 per share, a ₩2T deal with an 18.7% premium. Offer runs from September 13 to October 4.
- On top of that, MBK’s also rolling out a tender offer for Young Poong Precision at ₩20,000 per share—a hefty 113% premium over yesterday’s close.
- Spread action is possible if the Choi family counters, driving volatility. The market’s watching for a higher bid, which could create trading opportunities amid rising spread volatility.
Shinko Electric (6967 JP) Takeover – Time To Buy Dips, and Ibiden (4062 JP)
- Late last month, Shinko Electric Industries (6967 JP) announced that the JIC consortium Tender Offer due to be launched by end-August would be delayed. Next update? January 2025.
- Everyone was expecting a delay, but that caused the stock to fall. Then tech/AI fell out of bed, Ibiden crashed, then China export restrictions noise/pushback caused further delay.
- I saw a 9% gross spread yesterday and thought “Geez”, that’s a buy.” A day later, it’s 6%. Still wide, still interesting. And that has set a boundary.
MBK Partners and Jang Family Partner to Control Korea Zinc + Tender Offer of 14.6% of Korea Zinc
- After the market close on 12 September, Maekyung Business Daily reported that MBK Partners will become the largest shareholder of Korea Zinc (010130 KS) along with Young Poong (000670 KS).
- MBK Partners, along with Youngpoong and advisor Jang Hyung-jin, also plans to conduct a tender offer of 14.6% stake in Korea Zinc.
- The tender offer price for Korea Zinc is 660,000 won per share, which is 18.7% higher than the closing price on 12 September.
Tender Offer of 43.4% Stake in Young Poong Precision by MBK
- After the market close on 12 September, Hankyung Business Daily reported that MBK Partners plans to conduct a tender offer of 43.43% stake in Young Poong Precision.
- The tender offer price is 20,000 won per share (113% higher than the closing price on 12 September).
- Choi family currently controls Young Poong Precision. MBK plans to secure a controlling stake and obtain voting rights for the 1.85% stake in Korea Zinc held by Young Poong Precision.
Raymond Lifestyle: A Value Play in Ethnic Wear with Special Situation Potential
- Raymond Lifestyle (RAYMONDL IN) recently demerged from Raymond Limited. Since Raymond Limited was part of various indexes, Raymond Lifestyle was not. Index Fund selling led to a correction.
- The correction made Raymond Lifestyle a special situation value bet.
- The cherry on the cake is strong management guidance and a foray into the untapped non branded and unorganized apparel segment
When Dissenting REALLY Pays Off
- Back in August 2017, Xingxuan Technology, a privately held Cayman Islands company operating in the online food delivery space in China, was transferred by way of a statutory merger.
- The buyer was Alibaba Group (9988 HK)-backed Rajax, the key seller, Baidu (9888 HK). The dissenter, having paid US$125mn for its shares, was offered cash/scrip worth an estimated US$42mn.
- The dissenter considered terms low-balled. The judge agreed. The uplift? 659%.
Trial Holdings IPO Lockup – Large Number of Small Holders Hold Around US$400m of Stock
- Trial Holdings (5882 JP) raised around US$259m in Mar 2024. Its IPO lockup is set to expire soon.
- TH operates a network of retail stores in Japan that offer one-stop shopping under its everyday low price (EDLP) model.
- In this note, we will talk about the lockup dynamics and possible placement.
CR Beverage IPO: The Bear Case
- China Resources Beverage (CRB HK), China’s largest purified drinking water company, has received HK listing approval for a US$1 billion IPO.
- In CR Beverage IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on core business’ pricing pressure, a slow pace of revenue diversification, a sizeable pre-IPO dividend, and margin and FCF generation below its key peer.
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