In today’s briefing:
- Murakami-San’s Masterful Maneuvering to Stymy SBI’s Shysterish Shinsei Squeezeout
- DCM Takeover for Keiyo (8168) – Pretty Easy Deal
- SMIC’s Semi Shocker
- Kokusai Electric IPO: The Bear Case
- Kasumigaseki Capital (3498) Moving To TOPIX End-November
- Delta Electronics (DELTA TB / 2308 TT): Placement Increases Float; Ends Tender Offer Hope?
- Ecopro Materials IPO Valuation Analysis
- Target Cosmo AM&T as a Prime Candidate for KOSPI 200 Special Entry in December
- Ohayo Japan: Saying Goodbye to September’s Challenges; JapanX: EV Charging Infra Is OK
- Index Rebalance & ETF Flow Recap: Thai Bev, Golden Agri, EcoPro Materials, Doosan Robotics, PCOMP
Murakami-San’s Masterful Maneuvering to Stymy SBI’s Shysterish Shinsei Squeezeout
- The SBI Holdings (8473 JP) takeout of SBI Shinsei Bank (8303 JP) was opportunistic – done at a price SBI Shinsei’s Board considered not reasonable. Until it changed its mind.
- I had thought appraisal rights a great trade. I also thought it a good trade to own the back end, but that involved one holder putting ¥55bn on the table.
- Activist Murakami-san’s S Grant Corporation has done that. It will own one share of 8 post-consolidation on Monday. They are now equal shareholders with the govt entities. Wow.
DCM Takeover for Keiyo (8168) – Pretty Easy Deal
- Today after the close, DCM Holdings (3050 JP) announced it would launch a friendly takeover by Tender Offer for Keiyo Co Ltd (8168 JP)
- This is totally not a surprise. They signed a Business and Capital Alliance in 2017. DCM bought more at a premium last autumn. This takeover was obvious in the long-term.
- There are enough friendly holders to get this done. Activism would be hard unless it was really cheap, which it does not seem to be, but process wasn’t great.
SMIC’s Semi Shocker
- The latest Mate 60 Kirin SOC is a major accomplishment for the Huawei, SMIC combo
- SMIC will likely continue to refine their N+2 node and develop a 5nm-like process within 2-3 years, even without the use of EUV
- SMIC’s accomplishment is not reflected in its share price which lies midways between 52 week highs & lows
Kokusai Electric IPO: The Bear Case
- Kokusai Electric (6525 JP) is a speciality manufacturer of semiconductor production equipment. KKR & (KKR US) seeks to raise about US$750 million through listing Kokusai.
- In Kokusai Electric 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 a declining revenue trend, a challenging near-term growth target, high China revenue risk, margins on a downward trend, increasing inventory days and deteriorating FCF.
Kasumigaseki Capital (3498) Moving To TOPIX End-November
- Real estate consultant/developer/speculator Kasumigaseki Capital (3498 JP) announced Friday that it would move from TSE Growth to TSE Prime on 6 October.
- The stock was on the list of top potential candidates in TOPIX Inclusions: Who Is Ready (Sep 2023) (and has been for nearly a year). It’s a good list.
- This event leads to a TOPIX inclusion on 29 November. Analysis below.
Delta Electronics (DELTA TB / 2308 TT): Placement Increases Float; Ends Tender Offer Hope?
- The Delta Electronics Thai (DELTA TB) / Delta Electronics (2308 TT) spread peaked earlier this year and has been trending lower for the last few months (but it is volatile!).
- Delta Electronics Thai (DELTA TB) dropped 20% on Friday following Delta Electronics (2308 TT)‘s placement of 0.72% of shares outstanding. The stock last closed 12.7% below the placement price.
- Delta Electronics (2308 TT) still owns over 63% of Delta Electronics Thai (DELTA TB) and there could be more downside for the Thailand line over the near term.
Ecopro Materials IPO Valuation Analysis
- Our base case valuation for Ecopro Materials is implied price per share of 40,325 won per share, which is within the IPO price range of 36,200 won to 46,000 won.
- Given the lack of upside relative to the IPO price range, we have a negative view of this IPO.
- Ecopro Materials is engaged in the business of manufacturing and selling high-nickel precursors, one of the key materials for high-nickel anode materials for secondary batteries.
Target Cosmo AM&T as a Prime Candidate for KOSPI 200 Special Entry in December
- The introduction of float market cap is anticipated to apply not only to sector-based screening for the KOSPI 200 but also to special entry considerations.
- Cosmo AM&T emerges as a direct beneficiary of this change. It currently ranks 52nd within the KOSPI, maintaining a tight gap with the borderline (50th).
- Once it enters the KOSPI 200, it will also become a part of KOSPI 200 IT. As a result, the estimated flow size is approximately ₩230B, about 6x ADTV.
Ohayo Japan: Saying Goodbye to September’s Challenges; JapanX: EV Charging Infra Is OK
- OVERSEAS: The S&P 500 had a challenging September, closing down 5% for the month, marking its worst monthly performance since December 2022
- JAPAN: Euglena shifts focus to commercial biofuels, Welcia partners with AEON for increased food sales, and Hitachi Zosen revolutionizes artificial meat with a 90% cost reduction in synthetic protein
- JAPAN X: Growth in EV sales can only be sustained if charging demand is met by accessible and affordable infrastructure
Index Rebalance & ETF Flow Recap: Thai Bev, Golden Agri, EcoPro Materials, Doosan Robotics, PCOMP
- There were a few rebalances implemented last week, notably the Nikkei 225 (NKY INDEX) and the NIFTY family of indices. Plus an ad hoc Philippines Stock Exchange PCOMP INDEX rebalance.
- Nickel Asia (NIKL PM) will replace UnionBank of the Philippines (UBP PM) in the Philippines Stock Exchange PCOMP INDEX in a surprise move at the close on 3 October.
- There were outflows from iShares MSCI Japan ETF (EWJ US), Tracker Fund of Hong Kong (2800 HK) and iShares MSCI Emerging Markets (EEM US) during the week.
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