In today’s briefing:
- Seven & I Holdings (3382 JP): The Rumoured MBO Price Underscores the Trapped Value
- Nikkei 225 Index Rebalance Preview (Mar 2025): Ranking, Capping, Funding & Other Changes
- Kansai Electric (9503 JP) – HUGE Equity Offering To Stuff Retail
- Kansai Electric Placement – A US$3.5bn Raising Which Doesn’t Appear Well Flagged
- KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
- Situation Flagged: Sammy Stock Hits Level that Squeezes Family’s Loan Collateral Floor
- KOSPI Size Indices: Global Index Selling Leads to Potential Downward Migration
- SF Holdings A/H Listing – Thoughts on A/H Premium and past A/H Listings
- Weather Favorable For Rubber In Thailand But Can Trouble Indonesia, Vietnam
- Kansai Electric Power (9503 JP): A US$3.5 Billion Primary/Secondary Offering
Seven & I Holdings (3382 JP): The Rumoured MBO Price Underscores the Trapped Value
- In response to media reports, Seven & I Holdings (3382 JP) confirmed receiving a non-binding proposal from Junro Ito (founder’s son) and Ito-Kogyo. No terms were disclosed.
- Bloomberg suggests an MBO deal worth up to JPY9 trillion (US$58 billion), which implies an offer of JPY3,467.89, a 39.3% premium to the last close price.
- The “white knight” MBO undermines Alimentation Couche-Tard (ATD CN)’s offer and is a proxy for the restructuring plan’s value. Couche-Tard will likely walk if a binding MBO proposal emerges.
Nikkei 225 Index Rebalance Preview (Mar 2025): Ranking, Capping, Funding & Other Changes
- The review period for the Nikkei 225 Index March rebalance ends in January. There could be one outright change and one or two others driven by sector balance.
- Depending on the changes, passive trackers will need to buy between 8.2-20.5x ADV (8.75%-24.5% of real float) and sell between 9-38x ADV on the deletions.
- Fast Retailing‘s PAF could see a double reduction to keep the stock weight capped at 10%. There will be huge passive selling leading to funding inflows for other index constituents.
Kansai Electric (9503 JP) – HUGE Equity Offering To Stuff Retail
- The past few years, large equity offerings have either been IPOs or secondary offerings (without dilution). Today we get a big dilutive secondary offering from Kansai Electric Power (9503 JP).
- This is ~223mm shares or roughly ¥530bn against a current market cap of ¥2.1+trln. A 25% increase in share count. It is quite dilutive, but the stock is not rich.
- Because dilutive, not overly-well-flagged, and mostly retail, this could get hammered. The div is not high enough to make it attractive, so one has to appreciate high earnings yield.
Kansai Electric Placement – A US$3.5bn Raising Which Doesn’t Appear Well Flagged
- Kansai Electric Power (9503 JP) plans to raise up to US$3.5bn (including over-allocation) to partly fund its investment plans.
- This will be a large deal for the stock to digest and doesn’t appear to have been particularly well flagged.
- In this note, we will talk about the placement and run the deal through our ECM framework.
KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
- Kansai Electric Power (9503 JP) is looking to raise up to US$3.5bn via a primary offering and a sale of Treasury shares. Pricing date is between 26-29 November.
- Kansai Electric Power (9503 JP) is among the better performing stocks from the Electric Utilities industry and trades at higher valuations compared to its peers.
- There will be a fair bit of passive buying with around 29% of the offering being bought at the time of settlement of the shares.
Situation Flagged: Sammy Stock Hits Level that Squeezes Family’s Loan Collateral Floor
- Most loans with collateral floors are at or below thresholds, and all three court deposits are near or under a 30% drop from their initial valuation.
- No solid intel on share sales yet, and it’s unlikely they’ll sell Samsung Electronics after a 30% dip. They may focus on their stakes in Samsung Life or Samsung SDS.
- There’s talk Samsung might boost prices to help the family avoid the collateral floor issue, but with DRAM demand down, a major shareholder return seems unlikely for now.
KOSPI Size Indices: Global Index Selling Leads to Potential Downward Migration
- The review period for the March rebalance of the KOSPI Size Indices commences on 1 December and will end on 28 February.
- We see 5 migrations from MidCap to LargeCap, 1 new addition to LargeCap, 8 stocks moving from SmallCap to MidCap and 1 new addition to MidCap.
- The migrations from MidCap to LargeCap have outperformed the other migration categories. Four potential LargeCap to MidCap migrations will be deleted from a global index later this month.
SF Holdings A/H Listing – Thoughts on A/H Premium and past A/H Listings
- S.F. Holding (002352 CH) (SFH), China’s largest express delivery company, is now said to be looking to raise around US$1-1.5bn in its H-share listing in Hong Kong.
- SFH is the largest integrated express logistics service provider in China and the fourth largest in the world. It has been listed on the Shenzhen Stock Exchange since 2017.
- We have covered the company and deal background in our previous notes. In this note, we talk about the past A/H listing and possible premium.
Weather Favorable For Rubber In Thailand But Can Trouble Indonesia, Vietnam
- Thailand likely to receive less rains in the coming one-month period
- Indonesia, Vietnam, Cambodia likely to have above normal rains
- WMO predicts 60% chances of La Nina developing
Kansai Electric Power (9503 JP): A US$3.5 Billion Primary/Secondary Offering
- Kansai Electric Power (9503 JP) has announced primary and secondary offerings of up to 223.1 million shares (including overallotment) and a third-party allotment of 29.1 million shares.
- JPY239.9 billion of proceeds will be used to improve energy efficiency and decarbonisation, while other funds will be used for data centres, renewable energy and overseas investments.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 26 and 29 November (likely 26 November).
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