In today’s briefing:
- Senko Group (9069 JP) Offering – Banks and Insurers Unwinding Cross-Holdings in Offering
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: One Deletion & Capping Changes
- FXI Rebalance Preview: Three Potential Changes as Big Moves Unfold
- Initial Thoughts on the Webtoon Entertainment IPO
- Snow Peak (7816) – Bain Deal at ¥1,250 – 46% Premium Is Nice, Not A Home Run
- Quiddity Leaderboard MV J-Gold Miners Mar 24: One High-Conviction DEL and More Low-Conviction Cases
- COSCO Shipping (517 HK) Is Still Cheap
- CIMC (1839 HK): Justification For Unjust Offer Price?
- Monitoring LG Display’s Stock Rights Trading
- Trial Holdings Pre-IPO – Refiling Updates – Margin Uptick, More Golf Courses
Senko Group (9069 JP) Offering – Banks and Insurers Unwinding Cross-Holdings in Offering
- SENKO Group Holdings Co., Ltd. (9069 JP) today announced large financial institutional cross-holders would sell shares in a Secondary Offering. There’s a buyback on the back end.
- Cross-Holding unwinding is the subject of the moment. It will continue to be so. It will involve selldowns, and buybacks. Study the model of what companies must do what.
- In this case, Senko has a LOT of cross-holders and minimal excess cash. So investors buy more shares. But there is a buyback and index demand to come.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: One Deletion & Capping Changes
- Bizlink Holding (3665 TT) should be deleted from the Yuanta/P-Shares Taiwan Dividend Plus ETF in March and that will trigger selling of over 8 days of ADV.
- There will be capping and funding flows due to the higher AUM and passive trackers will need to trade over 0.4x ADV in 5 stocks.
- Shorts have covered positions in Bizlink Holding (3665 TT) but there has been a recent uptick that could be linked to positioning for the rebalance.
FXI Rebalance Preview: Three Potential Changes as Big Moves Unfold
- With the review period complete, there could be 3 changes for the iShares China Large-Cap (FXI) (FXI US) in March.
- CGN Power (1816 HK), Yankuang Energy (1171 HK) and China Coal Energy (1898 HK) could replace Wuxi Biologics (2269 HK), China Resources Beer (291 HK) and China Vanke (2202 HK).
- Short interest on China Vanke (H) (2202 HK) and Yankuang Energy Group (1171 HK) is higher than the other stocks and there could be covering on implementation day.
Initial Thoughts on the Webtoon Entertainment IPO
- Naver Corp (035420 KS) is trying to complete the IPO of its affiliate Webtoon Entertainment in the US stock market as early as June 2024.
- The expected value of Webtoon Entertainment (post IPO) is about US$3 billion to US$4 billion. Webtoon Entertainment is seeking to raise about US$500 million in this IPO.
- The IPO of Webtoon Entertainment in the US is likely to have a positive impact on Naver Corp (035420 KS).
Snow Peak (7816) – Bain Deal at ¥1,250 – 46% Premium Is Nice, Not A Home Run
- The possibility/likelihood of a “¥50bn MBO” for Snow Peak Inc (7816 JP) was leaked in a Nikkei article last Friday. It went limit up two days in a row.
- That TOB price is more than 70% off its three-year high. That will certainly disappoint some. Separately, the price seems a bit low given growth.
- The family and friends own ~42% so if someone gets upset, or uppity, there could be a challenge. Just because an MBO exists doesn’t mean people have to tender in.
Quiddity Leaderboard MV J-Gold Miners Mar 24: One High-Conviction DEL and More Low-Conviction Cases
- The MV J-Gold Miners index represents the performance small-cap gold and silver mining companies listed around the world.
- This index is reviewed semi-annually in March and September. During these reviews, names can be added or deleted from the index.
- In this insight, we take a look at the potential ADDs and DELs and our flow expectations for the index rebal event in March 2024.
COSCO Shipping (517 HK) Is Still Cheap
- In More Hong Kong Stocks Priced For Liquidation, I flagged thirteen stocks the market is all-but implying are priced for liquidation.
- One of the cut-off points in that analysis was a requirement for stocks to trade at least US$1mn/day. Removing that constraint uncovers shipping services play COSCO International Holdings (517 HK) (CSI).
- CSI’s market cap accounts for ~86% of its 1H23 net cash position. Earlier this month, CSI announced another positive profit warning. Those numbers should be out late-March.
CIMC (1839 HK): Justification For Unjust Offer Price?
- On the 28 November 2023, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a conditional H-share buyback at a $7.00/H-share, a forgettable 8.6% premium to last close.
- This Voluntary Offer followed by a Merger by Absorption requires shareholder approval and SAFE signing off. The SAFE condition was satisfied on the 26th Jan.
- Last night, CIMC announced the CBP investigation into the evasion of U.S. anti-dumping and countervailing duties was extended. There is no mentioned in interim accounts or HKEx of this investigation.
Monitoring LG Display’s Stock Rights Trading
- LG Display’s tight stock rights trading prompts a need to assess potential trading opportunities. Taihan Electric Wire’s concurrent capital increase warrants close observation.
- Watch for a potentially wider spread in Taihan Electric Wire’s stock rights trading from the 22nd, given local institutional demand focus on LG Display may create a buying vacuum.
- Observers speculate on a CJ CGV-like pattern at LG Display. With no current market movements, predicting such a scenario is difficult. Nonetheless, I’ll monitor closely and share any developments.
Trial Holdings Pre-IPO – Refiling Updates – Margin Uptick, More Golf Courses
- Trial Holdings (5882 JP) (TH) is now looking to raise around US$234m in its Japan IPO, after having canceled its prior listing attempt last year.
- TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
- We have looked at the past performance in our previous notes. In this note, we talk about the updates from its recent filings.
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